7 Steps to Take Before You Buy a Home in Nutley

Most potential home buyers are a smidge daunted by the fact that they’re about to agree to a hefty mortgage that they’ll be paying for the next few decades. The best way to relieve that anxiety is to be confident you’re purchasing the best home at a price you can afford with the most favorable financing. These seven steps will help you make smart decisions about your biggest purchase.

1. Decide how much home you can afford

Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.

2. Develop your home wish list

Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top-five must-haves and top-five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.

3. Select where you want to live

Make a list of your top-five community priorities, such as commute time, schools, and recreational facilities. Ask your REALTOR® to help you identify three to four target neighborhoods based on your priorities.

4. Start saving

Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 5% down. A small downpayment preserves your savings for emergencies.

However, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.

Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.

5. Ask about all the costs before you sign

A downpayment is just one homebuying cost. Your REALTOR® can tell you what other costs buyers commonly pay in your area—including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.

6. Get your credit in order

A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 620 for a home mortgage.

You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.

7. Get prequalified

Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest

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    Waiting to buy a house in Nutley NJ ? It’ll cost you

    Buying A Home in Nutley

    Timing is everything when it comes to a lot of things – baking a soufflé, fertilizing your lawn, and buying a home. Not so sure about that last one? With interest rates going up and housing prices on the rise, you may think that it might not be the best time to purchase a home or even refinance the one you’ve got. But experts disagree.

    “It is a big deal to buy a house. But if you do your homework and have the right documentation ready, this could be a great time to buy a home for many reasons,” says Jay Plum, executive vice president of Huntington National Bank, in Cincinnati, Ohio.

    Read on for the five major reasons why mortgage experts believe that there is no better time than the present to get that dream house you’ve always wanted.

    Reason #1: Interest rates won’t stay this low forever

    “A reason to look now into buying a home or refinancing is because these rates won’t stay [put] forever. That’s what rates do – they go up,” says Plum.

    In fact, the interest rate for a 30-year fixed mortgage is expected to go up to 5 percent by the fourth quarter of this year and 5.3 percent by the end of 2015, according to a recent forecast by the Mortgage Bankers Association (MBA).

    Why are rates rising? Well, one huge factor is that the feds will start raising rates about six months after they stop buying mortgage bonds, which is projected to happen sometime in 2015, says Plum.

    “[Rates] probably won’t start shooting up quickly. But a quarter of a point on an interest rate can mean about $100 more each month on [a homeowner’s] loan. For a lot of families, that can make a big difference,” he says.

    Reason #2: Credit score requirements are lowering

    Is your credit score lower than you’d like to admit? Well, good news: Credit score requirements for borrowers taking out mortgages are easing.

    In March, credit scores on purchase mortgages stood at 755, down from 761 in the previous year, according to data from Ellie Mae, a mortgage-software provider. Credit scores for FHA loans dropped even lower to 684, compared to 696 a year earlier.

    What brought on this change? The 2014 market is expected to be a more purchase-focused market, says Vickee Adams, vice president of external communications for Wells Fargo Home Lending.

    “Having a broader credit score range will serve to attract more borrowers into the market,” she explains.

    But why is there a need to attract more borrowers? Well, the demand for refinancing has dropped considerably. Refinance applications are about 70 percent slower than a year ago and are expected to continue to decline, according to a statement by the MBA in April 2014. As a result, banks are trying to find ways to boost lending to homeowners, including lowering credit score minimums.

    Reason #3: Spring and summer are the best times to buy a home

    It has been a brutal winter, and people who wanted to sell their house just didn’t want to bother with all the snow and cold weather, says Lawrence Yun, chief economist for the National Association of Realtors in Washington, D.C. The same goes for people wanting to buy a home – they just stayed put, he adds.

    “Many people who were forced to delay putting their house up for sale are doing so now. But spring has always been an important time in the real estate business,” Yun says. In fact, warmer seasons like spring and summer have always been a popular time to buy a home.

    People think about moving during summer vacation, because their kids will be out of school then, which helps makes things easier, says Yun. Buying a new home in the summer gives families enough time for the closing and moving before school starts again.

    No kids? Summer is still a popular time to sell or buy even for people without children. And it’s not just because the weather is nicer.

    “People just know that there are more listings coming in the spring and more buyers,” Yun says. “But from a buyer’s perspective, there will be more competition from other buyers.”

    Reason #4: Buying is still cheaper than renting

    Buying a house is a significant purchase, but in most parts of the country, it’s cheaper than renting. If that seems counterintuitive, let’s look at recent research by Trulia, an online residential real estate site for home buyers, sellers, renters and real estate professionals.

    According to Trulia, homeownership compared to renting continues to be the less expensive way to live in all of the 100 largest metro areas researched. The study compared the costs of renting and owning assuming homebuyers get a 4.5 percent mortgage rate on a 30-year fixed term loan with 20 percent down.

    So why should people buy a home now? The gap is getting smaller between the two choices because of rising mortgage rates and home prices, says Jed Kolko, Trulia’s chief economist and author of the report.

    “Now, at a 30-year fixed rate of 4.5 percent, buying is 38 percent cheaper than renting nationally, versus being 44 percent cheaper one year ago,” Kolko says in the report. “Some markets might tip in favor of renting this year as prices continue to rise faster than rents, and if – as most economists expect – mortgage rates rise, due both to the strengthening of the economy and Fed tapering.”

    However, the percentage is different in every housing market. In Honolulu, buying is only 5 percent cheaper than renting, while in Detroit, buying is 65 percent cheaper than renting.

    Reason #5: Home values are still competitive

    Are you looking for a bungalow with a white picket fence, a modern metropolitan penthouse, or a cabin in the woods? Well, it might be time to buy your dream abode before prices go too high.

    The good news is that that the prices of homes have gone up but haven’t skyrocketed, so they’re still within reach of many buyers. The median existing home price for all housing types in February 2014 was $189,000, which is up 9.1 percent from last February, according to recent press release by the National Association of Realtors (NRA).

    Plus, the housing inventory rose 6.4 percent to 2 million existing homes available for sale, reports the association. So there are more homes to choose from during your search depending on where you live.

    “Property values are still very competitive in most markets, but there is a tremendous amount of competition by buyers,” Plum says. “If you are looking at buying a home, be prepared to offer quickly, and get preapproved by a lender which will make things go easier.”

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      JLL hopes to sell the 116-acre campus as a single parcel.

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