5 Important Things to do Before Buying a House

For most homeowners, buying a house is the purchase of a lifetime. Before you sign on for your dream home—and potentially all the debt that will come with it—you need to take an honest look at your finances. If you are thinking of buying a house, these tips will help you align your personal budget with your house goals.

1. Know Your Household Budget

Setting up your household budget should start with having a firm grasp on how much money you have coming in (after taxes) every month. Next, you’ll need to determine your monthly expenses, from bills, utilities, and insurance to groceries and entertainment. The amount of money remaining after you subtract your monthly expenses is your expendable income. Are there areas you can improve on? Is the expendable income you have enough to cover the added expenses of a mortgage, insurance, and home ownership? Make adjustments where necessary.

2. Pay Down Debt

Of course, it is possible to buy a house even if you currently have existing debt, but you are putting yourself in a much better position to be approved for a mortgage if you can pay off most or all of your debt first. Paying off debt will also improve your credit score, which is also an important factor in getting the best terms for your mortgage.

3. Save for a Down Payment

Lenders have been increasingly cautious about who they lend money to and how much money they lend. Because of this, lenders often require a 20% deposit on a home. Depending on the price of a home, this deposit can get pricey. Focus your personal budget on saving towards this deposit. It will improve your chances of getting approved for a loan and give you a head start in paying off your home.

4. Know How Much House You Can Afford

Feel out what kind of loan you can get pre-approved for. Typically, your actual “new home” budget will be less than the amount you are pre-approved for, but this is a good jumping off point. Next, seek out homes that could realistically fit into your budget. Most lenders suggest a house that is about 2.5 time your annual salary.

5. Research and Inspect

If you find a home you can afford that you want to buy, don’t jump to sign the first contract of sale laid before you. Take the time to hire a home inspector. A home inspector is different from an appraiser and you will have to hire them each separately. However, a home inspector could save you money in the long run by uncovering any big issues with a home before you own it. Take some time to research the real estate market you are buying into. Is this home priced fairly compared to similar homes in the area? If not, you could use this data to argue for a lower price.

Finding a home you will love with your budget is possible. By modifying your spending, you can save money, get the best mortgage possible, and land your dream home.

What To Do With Your PPP Loan

$349 billion have been dispersed to small businesses as forgivable loans through the Paycheck Protection Program. Now those businesses have to decide how to use the money. The borrowed funds are restricted to payroll costs, rent, mortgage interest, interest on other loans, and utilities. If you are trying to make sure you receive the maximum amount of loan forgiveness, there are a few things to keep in mind as you spend these funds. Here is what we can infer from the available guidance on PPP loans.

1. Set Up an Audit Trail

You will inevitably have to provide a record of how you spent your money when you apply for forgiveness. One of the best ways to do this is to deposit the funds into a separate business checking account to keep them separate from your other business funds. Only use this account to pay for expenses that qualify for forgiveness. Keep all your payroll records, invoices for health insurance, mortgage statements, a copy of your lease, any canceled checks, and evidence of rent/utilities payments in an electronic file.

2. Pay Attention to the Calendar

From the date the loan is funded and the money is deposited into your account, you have eight weeks to spend the money on forgivable expenses. Even money spent one day outside of the payout period will not be eligible for forgiveness.

3. Restrict Non-Payroll Expenses

No more than 25% of the loan can be used to pay for non-payroll related items. So while you can use the money towards rent, mortgage interest, and utilities, if those costs exceed 25% of the loan amount they will not be eligible for forgiveness.

4. Avoid Overpaying Wages

The maximum amount you can pay each employee and still have it forgiven is $15,385 during the payout period. This amounts to roughly eight weeks of payroll for an employee making $100,000 a year. Group health insurance premiums, retirement benefits, and state unemployment tax are not included in this cap.

5. Hire Back Employees

There are penalties for businesses who made workforce reductions after February 15th. Unless those workforce reductions are restored by June 30th, the amount of the loan that can be forgiven will be reduced. So, if you had to let people go before receiving the loan, it might be worth it to hire those people back before June 30th to maximize the forgiveness you are eligible for.

6. Restore Pay Cuts

There is another penalty stipulation in the law that says if you have cut any individual employee’s pay by 25% of what they earned in the first quarter of 2020, that cut of pay must be restored by June 30th or some of the loan will not qualify for forgiveness. This only applies to employees who did not earn more than $100,000 in 2019.


If you follow the guidelines and keep a detailed and complete record of your expenses, you can maximize the forgiveness of your PPP loan. For businesses lucky enough to acquire this loan, it is a great opportunity to protect your business and your employees during the coronavirus crisis. Veitengruber Law is here to support small businesses as they navigate these new financial obstacles. If you need help deciphering the stimulus loan guidelines, reach out to us at any of the phone numbers listed on our website. We are all working daily, as a team, but from our respective homes. If you need our help, we are ready and able to give it!

Stimulus Loan vs. Tax Relief: Which is Better for Your Small Business?

stimulus loan

The recent stimulus legislation has provided support for small businesses facing economic hardship during the coronavirus crisis. There are two choices: 1) a combination of tax credits and the deferral of payroll deposits and 2) a loan known as the Paycheck Protection Program (PPP). These two options are mutually exclusive, meaning if you take the PPP loan you cannot take the tax credit or defer payroll tax deposits and vice versa. It can be difficult to determine which would be best for your business, but there are some key differences that can make a big difference. Let’s take a closer look.

PPP Loans

Administered through the Small Business Administration (SBA) and applied for through banks or other financial institutions, the Paycheck Protection Program loan can be converted into a grant and is available to businesses with 500 employees or less. For restaurants and hotels, the 500-employee limit applies to each individual location, not the business as a whole.

While the business cannot fold, it does not have to be open and operational during the crisis in order to qualify for the loan. Employees don’t have to work in order to receive their payroll. The ultimate goal of the PPP is for businesses to be able to continue paying employees throughout the crisis.

A PPP loan will be forgiven and turned into a grant if the small business can sustain its payroll for a minimum of eight weeks and use the loan proceeds only for salaries and essential operating expenses like utilities and rent. No more than 25% of the loan can be used for non-payroll costs in order to be forgiven. If the loan is eligible to become a grant, the interest (initially set at 1%) still has to be paid by the business. The maximum loan amount is either $10 million or 2.5 times the monthly payroll, whichever amount is less. The payroll for each employee is capped at $100,000 per employee. Terms of the loans are set by the Small Business Association.

ERTC

The second option is called the employee retention tax credit (ERTC). This credit is taken against payroll taxes. To be eligible for the ERTC, a business’s operations must be suspended by a government authority OR experience a 50% or greater decline in tax receipts for any quarter in 2020 compared against the same quarter in 2019. Eligibility ends when the business’s gross receipts are greater over one quarter of 2020 than 80% of if its receipts for the same quarter in 2019.

The credit includes up to 50% of wages paid from March 12th through the end of the year. The maximum a business can receive is $5,000 per employee against 2020 payroll taxes (both Social Security and Medicare). Since the credit is refundable, a business will receive a payment from the government if the credit exceeds the payroll taxes due. In addition to the ERTC, a business can defer deposits of payroll taxes due in 2020. One half of the deferred taxes must be paid by the end of 2021 and the other half by the end of 2022.

In order to determine which of the above options is right for your business, it’s important that you have a thorough understanding of both. Generally, businesses with higher-salaried employees will benefit more from the PPP loans/grant option while businesses with lower-salaried employees will get more out of the ERTC, but this is not always the case.

IMPORTANT: How fast do you need the money? The PPP requires an application and approval process. You can take advantage of the ERTC option immediately, but you will have to wait for any refunds from the tax credits.

Reach out to us if you need help deciding which option is best for your small business. We are excited by how many small NJ business owners we have been able to help stay afloat thus far!

 

 

 

 

 

 

 

 

 

Should You Sell Your NJ Home During a Recession?

sell your NJ home

If you had been considering selling your home during the typically busy spring market, no doubt the coronavirus crisis has given you pause. With fears of a looming recession and most people stuck at home, the idea of entering the real estate market can be daunting. Is now a good time to try to sell your home? The answer isn’t black and white. Today, we bring you four questions to ask yourself if you are preparing to sell your NJ home in the near future.

1. Are You Prepared for a Price Drop?

In a recession, homes will likely sell for less than they would in a healthy economy. Decreased demand coupled with a soft market means you will likely have to list your home at a lower asking price than you ordinarily would. You may end up selling for less than you paid for the home. Your net profit can easily end up being, well — non-existent.

If your house isn’t selling during a recession, an inflated price is normally the culprit. As a seller, you need to be realistic on the value of your home and list the property accordingly, which may mean being willing to lose money in order to close the deal.

2. Do You Need to Sell?

If it’s not absolutely essential that you sell your home during a recession, it’s in your best interest to wait awhile for the economy to improve. Naturally, however, there are situations that make moving a MUST. A new job, the need to be closer to an ailing loved one, and downsizing your budget are all reasons that justify selling no matter what the market looks like. If it is the right time for you to sell for personal reasons, don’t focus as much on the state of the market. Hone in on your own goals and take concrete steps toward achieve them.

3. Are you Buying and Selling?

If you’re buying a new home while simultaneously selling your old home, it’s possible that the financial gains/losses of these transactions will mean that you’ll break even. While you might have to sell for a lower price when the market is in a slump, the good news is that you’ll also likely be able to snag a deal on your new digs as well.

In fact, if you are selling a secondary property during a recession, it might be worth considering investing any money you make from the sale into purchasing a new property to turn into rental income when the market turns around. Real estate tends to be a steady investment even during times of economic turmoil.

4. Is Your Home Move-In Ready?

During an economic downturn, buyers are less likely to purchase a fixer-upper or a property that needs a lot of updates. Money-conscious buyers will be looking for a home that requires minimal renovations up front.

IMPORTANT: This doesn’t mean you need to fully renovate in order to be competitive on the market. Fresh paint, landscaping, and small repairs can go a long way toward improving the value of your property. Also, invest time and energy into generating buyer interest to help drive up the sales price.

Buying or selling a home during the 2020 quarantine/COVID-19 pandemic? Veitengruber Law is a real estate firm in Central NJ working full steam ahead all the way through the crisis. We can help you navigate the real estate market – whether virtually or in person following all of the recommended social distancing rules. Visit our website and follow us on social media to learn more about how we help NJ real estate clients every day.

Buying a New Jersey Home While in Quarantine

buying a new jersey home

Spring is normally peak home buying season. With the coronavirus crisis keeping everyone at home, this spring has seen a noticeable slowdown in the number of potential home buyers – social distancing measures and economic unrest has many would-be buyers hesitant to move forward with a home search. The good news: if you have the financial means, now is actually a great time to consider buying a New Jersey home. Today’s post explores the ins and outs of house hunting during the coronavirus outbreak.

It definitely seems to be a buyer’s market right now – but why? The coronavirus crisis has unmotivated buyers dropping off and determined buyers staying the course. With historically low mortgage rates and nervous sellers wary of an economic situation that is shifting daily, if you are looking to buy a home, there are many factors in your favor. Still, with a fluctuating economy and fears of a recession—is now really the best time to buy a house?

The answer to that depends on your specific circumstances.

It is almost impossible to perfectly predict the real estate market to determine the exact best time to buy or sell while we’re in the middle of a global pandemic. While mortgage interest rates are historically low now, rates are going to rise as more and more people refinance in the face of job loss. Buyers must consider their own financial standing. Are you at risk of losing your job or taking a pay decrease? It’s important to balance the opportunity to lock in a low mortgage rate with the possibility of future financial difficulties.

All of these financial uncertainties make getting pre-approved for a home more important than ever. Find out exactly how much home you can afford; then aim to buy a home that costs less than your maximum. Set aside money ahead of time for yearly home maintenance and repairs. Keep an emergency nest egg for unexpected repairs that could come up during your first year as a homeowner.

The biggest concern for potential home buyers right now is how to stay safe while looking for their new home. There are some creative ways to get around the traditional home-buying process while still maintaining social distancing standards. Virtual open houses and tours are becoming increasingly popular as social distancing measures deepen. Many home inspections are going virtual. While ordinarily you would accompany the inspector to view a home, many inspectors are now offering to use video chatting apps to allow buyers to be there virtually.

Buyers have been asking sellers to leave all doors, closets, and appliances open for the final walkthrough, so they can check the condition of the house without having to touch anything. If you do need to meet with a seller to see a house in person, you can always wear gloves and a mask, all the while keeping your distance and washing your hands before and after your visit.

Appraisers are using more computer algorithms to determine a property’s value instead of viewing a home in person. The government-backed mortgage lenders Freddie Mac and Fannie Mae have directed mortgage lenders to decrease the need for in-person inspections of the interior of a home. This does not, however, apply to FHA loans. Closings have also taken a digital turn, with many buyers and sellers sitting down to go over paperwork with title agents and real estate attorneys virtually.

You don’t have to let COVID-19 crush your real estate dreams. With some careful planning and creative workarounds, you can successfully complete the entire home buying process. Veitengruber Law is here to help you work towards your real estate goals throughout this crisis. We have been getting more and more familiar with the technology that allows us to be “virtually present” with our clients.

The Impact of Coronavirus on the NJ Real Estate Market

With the whole world seemingly coming to a standstill amid the 2020 coronavirus crisis, the New Jersey real estate market is starting to show signs of distress. Buyers are uncertain about leaving the house and sellers aren’t keen on letting strangers into their home. With the financial crisis destabilizing the economy on top of the current health crisis, many buyers and sellers are deciding to sit tight until this is all over. It can be hard to make confident decisions about real estate plans in the midst of all these unknowns. Here is what you need to know about the NJ housing market going forward.

Exactly how the coronavirus crisis will impact the real estate market is yet to be seen. The overall U.S. housing market saw a good start at the beginning of 2020. The virus has caused the real estate market to take a slower, more cautious pace. As the situation develops, there has been a significant slowdown in real estate listings at a time of the year when listings are normally at their highest. Another sign that the housing market is likely to slump: mortgage applications are down 24% from this time last year, despite mortgage rates being at an historic low. Refinance applications, however, are up 168% from where they were this time last year.

Despite this, those looking to enter the real estate market this spring are not totally out of luck. While the number of potential buyers is lower than normal, they are still there. And while some sellers are nervous to let outsiders into their homes, many sellers are adapting to the coronavirus challenge by asking potential buyers to follow additional hygiene rules. Buyers and sellers can wear masks, booties over shoes, and be mindful of keeping their distance. Frequent cleanings of a property can also help ease the minds of sellers and buyers during a transaction.

On the other hand, buyers can expect fewer bidding wars and more time to negotiate a better deal. As investors flee stocks for the safety of US bonds, buyers will notice that mortgage interest rates are increasingly favorable. We have already started to see this with some of the lowest rates in the history of the housing market. If you are looking to buy a home, now might be THE BEST time to do it if you can work through the logistics of social distancing.

For buyers, sellers, and realtors, there has been a big shift towards online real estate platforms to combat logistical issues caused by the coronavirus. People are utilizing real estate tools like Zillow, Trulia, and Realtor.com for their housing searches now more than ever before. Virtual tours, digital walk-throughs, and video conferencing are temporarily replacing traditional in-person interactions.

The full impact of the crisis is not yet known, but as long as you are making informed decisions and remain flexible, you should not be afraid to move forward with your plans to buy or sell a house in New Jersey this spring. Veitengruber Law will remain available throughout this crisis to offer expert advice and help you achieve your real estate goals.

Dealing with Financial Stress Due to COVID-19

Covid-19


Are you aware of the impact of long-term stress on the human mind and body? Now, more than ever, it’s crucial to be aware of the strain money woes can put on your body AND mind.


The arrival of COVID-19 has brought with it a barrage of physical illness, hospitalization, and even death. An effect of the virus mentioned much less often, that can also have a disastrous effect on lives, is the psychological stress so many are experiencing.

Not knowing when you’ll receive your next paycheck while the pile of overdue bills on your kitchen table grows, can have a negative impact on your health. The body’s “fight or flight” response is meant to be a helpful boost of adrenaline to get us through temporary challenging situations. The problem arises when the situation shifts from temporary to long-term.

Any stressor that puts the body into “fight or flight” mode for longer than an hour or so is going to wreak havoc on many bodily functions. The adrenaline rush that comes with being stressed causes an increased heart rate and blood pressure, dilated pupils, heightened brain function, and a higher intake of oxygen.

If stressors are present over a long period of time (like during a global pandemic), other health issues will begin to arise. In combination with a poor diet and lack of exercise, chronic stress is one of the leading causes of heart disease. Other complications from long term stress (money worries in particular) include:

  • Migraines
  • Sexual dysfunction
  • Asthma
  • Gastrointestinal issues
  • Chronic high blood pressure
  • Diabetes
  • Intractable all-over body pain
  • Stomach ulcers 
  • …and more

It’s generally not a good idea to make any important decisions when you’re under a lot of stress because your state of mind isn’t primed to make good judgement calls. Unfortunately, it’s pretty common to make bad choices when dealing with things like the fear of not being able to pay your monthly living expenses. Money stressors can incite depression or PTSD in some people, which can then lead to a downward spiraling cycle of Overspending, Guilt, and Fear; Lather, Rinse, Repeat.

In addition to depression and PTSD, stress can trigger other psychological problems like:

  • Anxiety
  • Insomnia
  • Sleep apnea
  • Narcolepsy
  • Restless leg syndrome
  • Hypersomnia
  • Anger issues
  • Hopelessness

Studies have shown a direct correlation between money stress and depression long before the current global pandemic entered our lives. It’s clear that people dealing with financial troubles are significantly more likely to be depressed than those who don’t struggle to pay their bills.

Under normal circumstances, it may be possible to overcome money worries before they lead to detrimental psychological or physical ailments. With the additional stress of the unknown that accompanies COVID-19, however, the average American is under an excruciating amount of mental strain.

Regardless of your socio-economic status, chances are high that you will feel the effects of this global pandemic. Whether due to furlough, job loss, money lost through investment(s), business closure, fewer customers, or being unable to work due to school closures, virtually everyone is feeling vulnerable. There is no shame or embarrassment to be had if you’re dealing with financial strife right now. No one could have predicted COVID-19 and the widespread destruction it has left in its wake.

If you’re dealing with financial stressors and need help figuring out the right money management  strategy, let Veitengruber Law help you. There are a number of options available to help those who have been affected by the fallout from the coronavirus. Our team is working full-time (at home but together every day via the power of technology). You can reach us at the phone numbers on our website, or you can send me an email at george@veitengruberlaw.com. You can also message us on any of our social media pages. We are active on Facebook, Instagram, Twitter, and LinkedIn.

Budgeting Basics During a Crisis

budgeting basics

Creating a budget is certainly not a walk in the park even in the best of times. Budgeting is an ongoing process and for most people, your budget has the possibility of changing from month to month. When the world is in the middle of a pandemic and you’re potentially working with a reduced amount of income, staying within a budget is of the utmost importance. Our advice for budgeting basics holds true now, but budgeting during a crisis presents challenges that we aren’t presented with when things are flowing smoothly. that you will want to pay special attention to as you map out the next several months of your finances.

If you’ve never set up a budget before, you picked an interesting time to start, but it can still be done, and major kudos to you for recognizing that you NEED to work within a budget. As with most things in life, the more you practice budgeting, the better you’ll get. Take a good hard look at all of the points listed below, note how they’ve changed since COVID-19 came on the scene, and you’ll be able to piece together a new (and hopefully very temporary) “Pandemic Budget.”

Income

Let’s begin at the most obvious place: your income. As we all know, your income is going to determine your budget, or in other words, how much money you have to spend. Your income can come from a variety of sources: your main day-to-day job, side jobs, child support, or even rental properties. It includes any source that brings money into your household each month. To start creating your budget, record the total amount of money that you’re making. For many Americans, this figure will differ from your “normal” income amount as you face reduced work hours, fewer clients, furlough, or total job loss. If the latter is the case, be sure to file for unemployment ASAP.

It’s important to take taxes into account, so make sure you’re recording your monetary income post-taxes. Some people refer to this as “take home pay.” If you’re married, you’ll potentially be combining your incomes, so record them on the same budget.

If you are self-employed, budgeting is even more important. Your COVID-19 month-to-month income may be unpredictable depending on your business. If you’re still bringing home money but your business will likely suffer in the upcoming months, use your income figures from the three months that you made the least amount of money over the past 2-3 tax years. Average those three amounts and use that figure for your projected pandemic monthly income.

Expenses

The next part (that no one likes to think about) is what you spend your money on. Though expenses have their own categories, you always have regular “offenders” every month like your utilities, mortgage, or car payment. Sometimes utilities can sway a bit from month to month, but in general, they stay consistent.

You can’t forget about the other necessities like groceries, gas, clothing, household necessities, and other miscellaneous items. For your budget, it’s important to take into consideration everything that is going to require money. You may very well need to (and/or be forced to) delete some expenses at this time both in order to cut back on spending and also because you simply won’t have access to some things right now.

Set Priorities

Your priorities right now are likely going to be slightly different than usual. Make sure the basics are covered before setting money aside for any extras.

  • Groceries: Although how you acquire your groceries may look different right now, you have to feed you and your family, so first and foremost, set aside enough money for food. This should come before you worry about other bills. You may have to adjust your food allowance slightly to allow for delivery fees at this time.
  • Utilities (Electric, Water): You have to keep the water running and the lights on, so these should take next priority. You might be asking, “isn’t my mortgage more important?” Well, living in a house without lights or water is no fun. The utility company won’t wait to turn your water and electric off if you don’t pay them. Many mortgage companies are giving a tad more leeway than usual during the challenging times we are living in!
  • Mortgage or Rent: Although you may get slightly less push back if you’re a little late, don’t put your housing payment off entirely unless it’s a dire emergency. Stay on top of it and don’t let it slip to the bottom of the pile.
  • Gas/Fuel: Normally, you have to put gas in the car to get to work. If you’re now working from home for the next several months, the good news is that the money you would have spend on gas and parking can be spread out to use in other expense categories where needed.
  • Clothing: This is another budget category that you can easily cut out right now. Even if you’re required to video conference, you only need to look presentable from the chest up, and no one is going to be able to discern whether you’ve worn the same shirt to every meeting – just hang it up to keep the wrinkles out in between calls!

Under normal circumstances, we’d say that as long as you’re meeting your necessary expenses then you can spend some of your income as you wish. A “fun money” fund, if you will. However, as we’re in the middle of a pandemic that shows no clear end date, we have to advise you to save anything you have left over – just in case you need to make ends meet for longer than originally planned.

Final Touches

Once you’ve figured out your grand total of expenses, you want to make sure that it doesn’t add up to more than your total income. If you end with a negative number, you’ll need to go back through and see what unnecessary spending can be cut out. If Income – Expenses = $0, you’ve successfully created your first budget! Some people prefer to have their final number greater than $0, just to provide a little wiggle room. This is naturally preferable so that you can begin to build up a small savings.

As you go through the next few weeks, chances are, you will have to make some edits to your budget. This is more than okay. Remember, creating a functional budget is a tricky process even in the best of times and it takes time to figure out. Don’t be discouraged at the thought of having to create a budget; instead be proud of yourself for taking a step towards managing your money skillfully, especially in such a challenging time.