The New Jersey Homeowner’s Guide to Tax Credits

new jersey homeowner

New Jersey homeowners are burdened with the highest property tax rates in the US. It is no wonder that every year, NJ homeowners look for ways to reduce their tax bill. The good news is there are a lot of ways to find tax relief in New Jersey; and we’ve compiled a list of four strategies for you right here on the Veitengruber Law blog.

Every single NJ homeowner has the right to challenge the taxable value of their home. While you cannot change the state property tax rate, you can change the number your home is valued at and therefore lower the cost of property taxes you pay. An NJ home valued at $250,000 and taxed at 2.4% (the NJ average) would create an annual property tax of $6,000. The homeowners of this property can appeal the taxable value of the home. If the appeals board agrees and lowers the value to $200,000, their new property tax bill would be $4,800. Even a minor adjustment can save NJ homeowners thousands of dollars over the course of their lifetime.

You can determine the taxable value of your home by visiting the NJ Department of the Treasury website and searching your county’s property records. Your individual county might have further information about how they assess property value, schedules, and assessor records. Once you know the taxable value of your home, you can appeal your property tax assessment. This process will be different from county to county. You will need to prove that your home has a lower value than what it was assessed at, either because of size or condition.

While every NJ homeowner is eligible for the appeals process, the following property tax relief programs require the homeowner to meet specific prerequisites.

1. Basic Homestead Rebate or Credit

If you make less than $250,000 a year, you might be entitled to a rebate or credit. This return is based on the first $10,000 in property taxes paid the previous year. The percentage of your property tax you are entitled to receive back in a credit or rebate depends on your annual income. The lower your income, the higher your percentage.

2. Senior Benefits

If you are 65 or older, you could qualify for an additional rebate or credit under the homestead rebate. This would again depend on your annual income. Additional tax benefits are available if you are a senior receiving Social Security, if you have lived in NJ for 10+ years, if you have lived in your current home for 3+ years, if you have been consistent with paying your property taxes, and if you meet specific income limitations.

3. Blind or Disabled People

NJ homeowners who are blind or otherwise disabled can qualify for similar benefits available to seniors. In NJ, you have to prove you are “permanently and totally disabled,” meaning that your disability is not temporary and you can prove a significant, determinable physical or mental impairment.

4. Veterans Benefits

In New Jersey, the home of a totally disabled veteran is exempt from property tax. A veteran who actively served in a time of war is eligible for a tax credit of $250. The spouse of a veteran is also eligible for these benefits. This November, NJ voters may decide on a bill that would extend this $250 credit to all NJ veterans, regardless of whether or not they served in active duty.

If you think you qualify for any of these or other tax breaks in NJ, it can be worthwhile to consider seeking legal help to reduce your NJ property tax. Veitengruber Law can help you work through the sometimes complicated appeals process to lower your annual property tax bill.

How Assisted Living or Long Term Care Can Lead to Bankruptcy

nj bankruptcy

According to the New York Times, the rate of people 65 and older filing for bankruptcy is currently three times what it was thirty years ago. Disappearing pensions, the all-time-high cost of medical expenses, and insufficient savings are all contributing to the financial instability of America’s elderly. It can be easy to underestimate how expensive long-term care and assisted living can be. When this happens, retirees find themselves unprepared to pay for the care they need. This can burden a family’s personal finances and in some cases lead to bankruptcy.

A lot of the issues impacting this crisis come down to sheer numbers. By 2050, there will be about 88 million adults over 65 living in the US. By this point, nearly 62 million of these people will need long-term care of some kind. The medical cost of this group is expected to be very high. A huge chunk of a family’s financial resources will be earmarked for long-term nursing care at home or an assisted living community. Family members will also need to find funds for co-pays, food, physical therapy, and medical equipment (walkers, adjustable beds and chairs, handicap accessories for the bathroom, etc.).

In 2016, the average yearly costs for senior care were:

$82,128 a year to stay in a nursing home

$43,536 a year to receive assisted living care

$20.50 an hour for in-home care

What’s more, many of these costs are increasingly the responsibility of elderly individuals and their family, as federal and state assistance for the elderly is consistently diminishing. Medicaid, for example, will cover most fees associated with short term stays in assisted living—but only for those who meet the program’s strict financial guidelines. Medicare also cannot be relied upon, as it will only pay up to 100 days per illness, leaving the individual holding the bill for any additional long-term care requirements. Similarly, even those with long-term care insurance can find their care is not covered under a policy’s conditions, exclusions, and benefit limits.

Nearly a quarter of long-term care costs are paid directly by individuals and their families. What this means is that when a senior can no longer care for themselves and must move into an assisted living facility or receive in-home care, the burden often falls on their family to pay for it. For many, financial contributions to mortgages, college costs, and retirement savings mean there is little disposable income to cover the cost of their parents’ long-term care. When a family cannot afford a loved-one’s care out of pocket, they are now forced to use their own personal and/or retirement savings. Some adult children of today’s older Americans are taking out personal loans to cover care expenses.

For many American families, it simply is not possible to cover the rising cost of long-term care for an elderly loved one. Bankruptcy can result when medical debt becomes unmanageable. Veitengruber Law is a full-service estate planning, debt management, and bankruptcy law firm. We can help you plan for the future, make your debts more manageable, and discuss your options when medical debt becomes overwhelming. Bankruptcy can help alleviate stress from medical debt and help you get your finances back under control.

10 Personal Finance Challenges NJ Millennials are Facing

According to a recent survey done by Credit Karma, 61% of millennials said money was their #1 source of daily stress. Having grown up or entered the workforce during the Great Recession, millennials face some unique financial challenges. Even rising wages cannot keep up with the ever-increasing cost of living for this group of young consumers. When it comes to personal finance, NJ millennials face a number of burdens specific to their generation.

1. Higher Than Ever Student Loan Debt

Crushing student loan debt is so universal to the experience of millennials that it has spawned countless think pieces, endless memes, and has even influenced national political campaigns. The average student loan debt per graduate is $17,126 according to Business Insider. The number of students taking out loans to pay for college has increased by 10% since 2000 and students are borrowing more money now than ever before to afford their education. This kind of debt means millennials are often entering the workforce with major deficits.

2. Saving for a House Takes Longer

As home prices continue to climb, millennials buying homes today will pay an average of 39% more for their first home than baby boomers did. Home ownership for millennials is at an industry low as millennials avoid taking on more debt and spend years saving up for that 20% down payment. Buying a home has become less of a next step and more of a dream for millennials. This is true of many “milestones” ranging from buying a car to getting married and having children.

3. Living Paycheck to Paycheck

Besides struggling with more debt and higher costs of living than previous generations, millennials are also often unemployed or underemployed. 44% of recent college graduates report struggling to make ends meet with dead-end and low paying jobs. Making enough money to get ahead of their expenses is increasingly difficult. The “side hustle” has become a way for millennials to use their skills to make money to supplement their regular income, but even with a supplemental income, millennials continue to struggle to build wealth.

4. Caring for Elderly Parents

Despite earning less, millennials are spending much more on care for aging parents than previous generations. On average, millennials who pay for elderly care spend 27% of their income on care services. This is coupled with the fact that many millennials (53% according to the Country Financial Security Index) have had to receive financial assistance from parents or family members since turning 21. This generation is ill prepared for the burden of caring for elderly parents.

5. Poor Planning for the Future

Too many millennials have little or no savings, struggle with being un-insured or under-insured, and tend to put off retirement planning. Most millennials are only saving on average 5.3% of their income. Even if millennials are working towards the suggested $1 million retirement savings, things aren’t looking good for them. Based on inflation rates, $1 million dollars today will have the spending power of $306,000 in 40 years. These numbers mean many millennials will be facing poverty level finances in their golden years.

6. Ignoring Credit Scores

Many millennials don’t pay attention to their credit score until they need it to buy a house, a car, or to get a personal loan. It can be easy to ignore your credit score, and many generations struggle with bad credit. But for millennials, who are already dealing with higher debt and younger credit histories, it is especially important to spend some time working on building better credit. Good credit can be the pathway to making some of those sought-after big purchases millennials keep putting off—like buying a house.

Are you a millennial? Share in the comments what financial hurdles you’re experiencing, especially if it wasn’t mentioned in today’s post.

5 Credit Repair Books YOU NEED TO READ in 2020!

credit repair

Veitengruber Law has been finding NJ credit repair solutions for years. We help our clients find customized strategies with our holistic approach to debt relief. We know that knowledge can empower you to return to financial health. The best way to gain knowledge is to hear what the experts have to say. Here we have rounded up some of the best credit repair books you can read. These books won’t give you an instant solution, but they can provide critical information that can help you start rebuilding your financial life.

 

1. How to Repair Your Credit; by Benjamin Harris and John Score (2019)

This book’s cover boasts that it will be able to help you overcome credit card debt forever. Harris and Score detail how to do this and more by using federal laws and existing loopholes to eliminate bad credit and increase your financial freedom. You will learn when to worry about your credit score and what to do about it when it is time to worry. These insider credit bureau secrets will give you an edge in navigating the sometimes confusing world of credit reports and debt.

 

2. An Attempt to Repair America’s Broken Credit System; by Andrew Coakley (2019)

Coakley is a professional credit repair expert and in this book he offers his insider insight into credit repair solutions. He demystifies the complexities of credit reports, scores, and agencies so you can be armed with the knowledge you need to get on top of your debts. He also offers valuable knowledge about managing your credit during marriage and divorce. His 10-day fix for raising your credit score promises quick results that can turn into long-term solutions.

 

3. High Credit Score Secrets: The Smart Raise and Repair Guide to Excellent Credit; by Thomas Herold (2019)

This book offers over fifty different ways you can instantly boost your credit rating and see real change in your credit score in sixty days or less. Herold walks you through how to use credit cards to build good credit and how to guard a good score for life. An expert of the financial world, Thomas Herold breaks down the exact mathematical algorithms used by the three major credit bureaus so you can learn exactly which financial choices will improve or damage your score.

 

4. Hidden Credit Repair Secrets: How I Bounced Back from Bankruptcy; by Mark Clayborne (2019)

Step-by-step instructions for doing your own 6 letter campaign to challenge any inaccurate, unverifiable, and questionable information on your credit report set this publication apart from the others on this list. With letter samples, actionable steps, and up-to-date info regarding current economic conditions, this book offers a comprehensive strategy to work with credit bureaus to repair your credit. The step-by-step nature of the book makes it easy for even the most financially inexperienced consumer to follow.

 

5. Money Management: The Ultimate Guide to Budgeting, Frugal Living, Getting out of Debt, Credit Repair, and Managing Your Personal Finances in a Stress-Free Way; by Scott Wright (2019)

Not only will Scott Wright help you repair your credit, he also aims to help you reshape how you think about money and managing your personal finances. Included are tips like simple ways to save every day, investing for beginners, budgeting for beginners, and how to boost your credit score by paying off debt. A big part of this book is focusing on how to stay stress-free throughout this process by focusing on the things you can do and accepting the time it often takes to restore true financial health.

It’s important to note that there are no overnight solutions to credit repair, but these books can definitely give you the knowledge you need to get moving in the right direction.

 

 

 

 

 

 

 

 

 

 

NJ Real Estate: Hidden Fees and Costs You Need to Know About

nj real estate

Your home is likely to be the most expensive financial investment you will make in your life. Just a few of the “hidden charges” in buying a home include: closing costs, property taxes, home owner’s insurance, and fees charged by a variety of experts throughout the purchasing process. For the unsuspecting home buyer, hidden fees and miscellaneous costs associated with buying a home can come as a big shock. To help you budget for this major purchase, we’ve compiled a descriptive list of some costs you might not be preparing for.

Closing Costs

The time it actually takes to close on a property is typically somewhere between 30 and 60 days. During this time, the sale is considered to be pending as you work out the details with the seller. At the end of the closing process you’ll make a major payment towards your new home in the form of closing costs. Closing costs typically range anywhere from 2% to 5% of the purchase price of the home. The charges included in closing costs can include fees for appraisal, wire transfers, credit report assessment, title insurance, document preparation, and many other closing-related processes.

Home Inspection Fees

While a home inspection isn’t a requirement, unless you happen to be an expert real estate inspector, hiring a professional is something you should really consider. You will be able to purchase the home with confidence in its condition or save yourself money in repair costs by alerting to seller to necessary repairs. Putting aside money in your budget for a home inspection can save you a lot of money in the long run.

Home Owner’s Association (HOA) Fees

If your home is located in a gated community, chances are high you will be required to join the HOA. Monthly HOA fees go toward community maintenance and repair of common areas, like sidewalks, entrance-ways, parking areas, and landscaping. Some HOA fees can be surprisingly pricey so it is important to know about them before you sign the dotted line.

Property Taxes

Depending on where you live, property taxes can cost you a lot. New Jersey is well-known for having very high property taxes across the state, but some areas of NJ have more reasonable tax rates. The average property tax bill in NJ ranged from $450 in Walpack Township, Sussex County to nearly $32,000 in Tavistock Borough, Camden County. Pay attention to the property taxes in the area you are looking to buy. It can make a huge difference in your bottom line.

Real Estate Agent Fees

Real estate agents make a living via commission. The average rate of commission in NJ is 5-6% of a home’s sale price. Real estate agents on both sides will be offered part of the commission. Both agents will be paid out by money the buyer gives the seller for the home at the time of closing. It is the seller’s responsibility to ensure both agents get their commissions out of this money. The rate of commission is pre-determined and agreed upon by both sides before closing. For instance, if it is decided the seller’s agent will receive a 3% commission and the buyer’s agent will receive a 2.5% commission on the sale of a $210,000 home, the seller’s agent will receive $6,300 and the buyer’s agent will receive $5,250.

These are only some of the hidden costs associated with purchasing a home. You don’t want to be blindsided by financial pitfalls after you find your dream home. If you’re thinking about buying a home, or if you’ve already signed a contract and you’re in the attorney review period, we’re more than happy to look over the contract for you and answer any questions you may have. Visit our website and call us at the location that is most convenient for you – we have offices in Wall, Bordentown, and Metuchen.

What Generation Z is Looking for in NJ Real Estate

nj real estate

The real estate market is gearing up to welcome a new generation of home buyers: Generation Z. This generation, born between 1997 and 2012, are now buying around 2% of homes on the market. That might not sound like much now, but this money-conscious group is poised to become a major NJ real estate purchasing force in the years to come. As the oldest in this group finish college and start jobs, homeownership is the next big move. Here is what Generation Z is looking for in a home.

The big thing to note with this group is that they are interested in single family homes in diverse communities. A survey taken by Homes.com indicated that living in a diverse community was important for 58% of Gen Z survey takers. Instead of condos, townhomes, or apartments, Gen Z largely expects a single family home to be their starter home. Amenities desired by Gen Z included a backyard with a deck or patio, open floor plans, a garage, and hardwood floors.

Something not on their list? Smart home technology. Surprising many real estate experts, smart home tech ranked low on a list of desired amenities, along with eco-friendly appliances.

This generation may be the most informed first time home buyers ever. Being essentially born with smart phones in their hands, this tech savvy group knows more than ever about the home buying process. Even Gen Z buyers new to real estate have likely done some research before approaching a realtor. This also makes them discerning potential buyers: they know what they want and they are willing to spend some time looking for it.

In 2019, Gen Zers were buying starter homes costing on average $160,600, an 11% increase from 2018. This generation, in general, is looking for inexpensive homes in New Jersey towns with strong local economies and low crime rates. Many Gen Zers are looking to settle in the areas around where they went to school, making college and university towns a popular choice.

The financial position of Generation Z may be the only thing holding them back from entering the real estate market. While they tend to be in a better financial position entering their mid-20s than the Millennial generation that came before them, they still have student loan debt to grapple with. With some student loan payments equaling a typical mortgage payment, this is a tall hurdle to jump. On average, Gen Z home buyers are putting only 5% down on real estate purchases, meaning they are likely relying on private mortgage insurance (PMI) to pay for their homes.

Right now, most of the future home buyers in Generation Z are focused on experiences, travel, and paying off their loans instead of purchasing real estate. While they are in no rush to purchase a home right now, this unique demographic of home buyers will be hitting the market before you know it. You can count on them looking for New Jersey communities with easy access to the arts, entertainment, and Instagram-able experiences.

5 Tips for a Successful New Jersey Real Estate Investment Purchase

NJ real estate

It can be difficult for beginners in real estate investing to determine which properties would be a good purchase. You may have a plan, your finances might be stellar, but once it’s time to take action, sometimes even the best laid-plans get derailed. If you are looking to invest in New Jersey real estate, there are some things you should keep in mind as well as specific properties to steer away from as you make your first investment(s). To help get you started on the right foot, we’ve compiled five tips that will guide you toward a successful NJ real estate purchase.

1. Keep an Open Mind

The biggest key to successfully investing in real estate is to remain open to the possibilities around you. Don’t go into your property search looking for anything too specific. Even if you have a mental picture of investing in a residential home to flip – don’t ignore the excellent commercial real estate opportunity down the street. There are so many different types of real estate opportunities available to you! By keeping an open mind, you’ll be less likely to miss out on something great.

2. Be Mindful of Location

You might find a fantastic property and fall in love with it instantly. WARNING! Don’t invest until you have a good, solid understanding of the location. There is a rule in real estate: “A bad house in a great neighborhood is better than a great house in a bad neighborhood.” You can always renovate a property—you can’t give the street a makeover.

3. Prepare for Competition

The popularity of investing in New Jersey real estate is on the rise. Don’t be surprised if you put an offer in on a property only to be outbid. Some of the biggest competition you will likely face will be from all-cash buyers. Many all-cash buyers are offering full price or more in order to secure their investment. Be aware of these competing investors, but don’t be dissuaded if you are outbid a few times. Ask sellers about their goals and see if there is any way you can help them meet those goals.

4. Look Past the Staging

Home staging is an increasingly popular trend for sellers looking to get an edge in the market. And there is a good reason for this: many buyers are more likely to overlook faults with the property if it is staged. Don’t let the aesthetics of staging deter you from asking the important questions about a property. Make sure you move things around, test hardware and appliances, and get to the bones underneath the picture-perfect set up.

5. Know When to Quit

Don’t be afraid to cut your losses and get out if you make a bad investment. Even some experienced investors will stick with a bad investment in a futile effort to recuperate the money they sunk into a property. It’s possible that what seems like a sure bet can take a nosedive and turn out not to be a money-maker. Smart investment behavior includes knowing when to walk away, learn from your mistakes and make better choices next time.

 

Real estate can be a challenging and rewarding opportunity for motivated investors. The sky is the limit when it comes to your real estate goals. If you follow these five tips, you will be on your way to a successful NJ real estate purchase!

 

 

 

 

 

 

 

Mortgage Co-signer vs Co-borrower: What’s the Difference?

mortgage co-signer

If a bank is on the fence about approving a loan, they may ask the borrower if there is anyone who can share responsibility of the loan. Including multiple people on your loan application can increase your chances of getting the loan accepted. While many people think co-signers and co-borrowers are the same thing, these are two very different roles in the eyes of a lender. To decide which option is best for you and those helping you get the loan, it helps to compare the two roles.

A co-signer is someone who guarantees a loan for someone else. This means that the co-signer is agreeing to take responsibility for paying off the loan in the event the primary borrower fails to do so. With more resources available to pay back the loan, the lender will be more confident in receiving payment. A co-signer does not have title or ownership over any items acquired with the loan.

A co-borrower is one of at least two primary borrowers. For example, if a couple is buying a home together, they can apply for a loan as co-borrowers. Like co-signers, co-borrowers are responsible for the loan even if the other primary borrowers do not meet agreed upon payments. Unlike co-signers, a co-borrower will have an ownership interest in the property being purchased.

While both a co-signer and a co-borrower can help you when it comes to qualifying for a loan, there are some differences in the risks associated with the responsibilities of co-borrowers and co-signers.

It is important to understand as a co-signer that you are essentially taking on an all risk, no reward deal in which you could be responsible for paying off a loan with no benefit to yourself. If you co-sign to help someone buy a car, it’s their car—and if they stop paying on the loan, it is your responsibility to pay for their car. More than just paying the loan balance and interest, you can also be charged for late fees and other charges if the primary borrower has stopped making payments. Co-signing can also negatively impact your ability to borrow or your ability to get preferable terms on new lines of credit.

For co-borrowers, the risk is a little more personal. Because you are combining financial resources with someone else, co-borrowing can allow you to get approved for a loan that is much bigger than you could pay by yourself. Tragic accidents, bad break-ups, and any other number of difficult circumstances can leave you with a loan that is outside of your financial capacity. It can be very difficult to remove someone’s name from a loan, forcing you to sell the shared property or go through a time-consuming refinance in order to pay off the loan.

The bottom line is if you need someone to co-sign or co-borrow in order to secure a loan, you need to make sure it is someone you trust. Communicate fully the responsibilities associated with each role and confirm they feel comfortable adding their name onto the loan application. Keeping up regular communication with this person about the status of the loan can ensure you are on the same page, which is important since they are invested in the mortgage, too.