NJ Foreclosure: Am I Entitled to Mortgage Surplus Funds?

mortgage surplus

Most people view foreclosure as the end of a long battle to keep their home. While it may feel as though you are losing everything, there is still a chance you could get something out of the process. Foreclosure can be a very frustrating experience, but there is a potential for you to receive some funds from the sale of your home to help ease the burden of losing your residence. The monies homeowners can be entitled to after the sale of their home at auction are known as mortgage foreclosure surplus funds. Here, we take a look at who is entitled to mortgage surplus funds.

Once your lender has obtained a final judgement of foreclosure, they will begin trying to sell your home in a sheriff sale in order to make up for the money you owe on your mortgage and any expected costs or fees that have accrued. A sheriff sale typically occurs in the form of an auction. The lender can start the bidding at any amount up to the total amount owed to pay off the debt. However, if multiple buyers are interested in the property, a bidding war can jack up the ultimate sales price. If the buyer ends up paying more for the house than the total amount the owed by the original homeowner, there is a mortgage surplus. Alternatively, if the home sells for less than the borrower owed on the house, the remaining balance is a deficiency. While the lender can file a separate lawsuit to recuperate these funds, it is not a common practice to do so in New Jersey.

Am I entitled to any mortgage surplus funds?

You are likely entitled to surplus funds if: 1) your home was sold in foreclosure for more than you owed the lender, 2) you had equity in your home before foreclosure, or 3) you received a letter from the foreclosure trustee notifying you of surplus funds. It is important to note that any other creditors with liens or judgements on the property may also be eligible to receive surplus funds. If these other creditors do not make application or if there are no other creditors connected with the property, the funds will go to the homeowner.

After your home has been sold and the lender has received payment for the amount owed in the final judgement of foreclosure, the excess money will be deposited into the Superior Court Trust Fund. The lender is not entitled to any funds exceeding what was described in the final judgement, including taxes or insurance costs accrued after the fact. In the event that there is a surplus, the County Sheriff who oversaw the sale will be able to provide information concerning how to receive payment. The former homeowner can file a motion with the court explaining why they are entitled to these funds. If the court approves this motion, an order directing payment of the surplus funds to the former homeowner will be issued.

If you think you are entitled to mortgage surplus funds, Veitengruber Law can help. We are highly experienced in the New Jersey foreclosure process and are proud of just how many NJ homeowners we have helped to the other side of losing their home. We can help you recover a surplus from your foreclosed property. Additionally, we can help you navigate the legal process and handle complex paperwork so you can get your money back faster. We understand the stress and anxiety going through foreclosure can have on our clients. Our goal is to ensure the recovery of any monies due so your brighter financial future can start sooner!

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Mortgage Relief Scams: What You Need to Know

mortgage scam

If you’re in over your head on your mortgage, you may be starting to feel desperate. In these difficult times, it can be easy to see a mortgage relief scam as a lifeline to financial stability. By the time people realize the phony promises and baggage attached to these scams, it can be too late. The best way to avoid mortgage relief scams is to be informed of your rights and what warning signs to look for in a potential scam. Even if an offer looks legitimate, here are some basic precautions you can use to protect yourself against fraud.

The most important thing you can do is understand your rights as a homeowner. In 2010, the Federal Trade Commission published the Mortgage Assistance Relief Services (MARS) rule in order to protect homeowners from mortgage relief scams. This rule holds companies promising mortgage assistance accountable by prohibiting them from collecting any fees until after fulfilling their promises. This means that even if you agree to accept help from one of these companies, you don’t have to pay any money at all until you have received and accepted a written mortgage relief offer from your lender. The MARS rule also bars these companies from saying they work for the government or your lender and requires them to warn you that your lender may not agree to modify the loan.

When trying to spot a scam, a good rule of thumb is that any organization that tries to charge you a fee for mortgage counseling or loan modification is not legitimate. Other than accredited attorneys, the programs that can help struggling homeowners are almost always free. If a company asks you to pay up front or with a cashier’s check/wire transfer, it’s most likely a scam. Other red flags: if they guarantee results, pressure you to “sign now,” or attempt to cut you off from contacting your mortgage lender.

Here are some precautions you can take as a homeowner to protect yourself from mortgage relief scams:

1. Do your research.

Check to see if the establishment has a website and verify that the contact information listed matches the information you have. Make sure the business address is legitimate, and not just a P.O. box. The Better Business Bureau can also provide helpful information; more specifically if the company is associated with any known scams. Do not provide any personal information until you have taken the time to do ample research.

2. Don’t sign without reading the fine print.

Be careful what you sign. Make sure you have read the document thoroughly and understand it completely before you put pen to paper. It is very important for you to understand what you are agreeing to when you sign a document. If you are in doubt about anything, recruit the help of a lawyer to look over the document and explain to you in plain language what the agreement will be.

3. Keep up with mortgage payments.

Some scams advise homeowners to stop making regular payments on their mortgage while they “negotiate” with your lender. Never do this. Missing monthly mortgage payments can increase your risk of foreclosure and damage your credit, putting you into a deeper financial hole. It is also important to note that you should never be sending your mortgage payments to anyone other than your lender unless your lender has directly told you, in writing, to do so.

4. Never sign over your deed.

Under no circumstances should a mortgage relief company ask you to sign over your deed to a third party. There are two times you can sign your deed over: when you sell the home or if you sign it over to your lender in order to fulfill a debt forgiveness agreement. Signing your deed over to a third party will not save your home.

If you do find yourself the victim of one of these scams, the best thing you can do is to report it. This will give you the best chance of recovering some of your money, although the process may be lengthy. You can file reports through the FTC, the Better Business Bureau, the Consumer Finance Protection Bureau, or through an attorney.

Most people fall for mortgage relief scams looking for a quick way to get out of a financial jam, but getting on top of debt takes time and commitment to financial responsibility. If you find yourself in trouble with your mortgage, the best thing you can do is work with your lender to come to an agreement on the situation. Going to your lender directly can be intimidating. Veitengruber Law is here to help. Our experienced NJ real estate legal team can work with you to determine real debt relief solutions for your specific situation.

Can I be Approved for a NJ Mortgage with a Bad Credit Score?

NJ mortgage

A lot of people with a bad credit score assume it is impossible to become a homeowner. A low credit score can definitely make it harder to get a new credit card or any type of loan, including (and especially) a mortgage loan. If the one thing standing between you and home ownership is your credit score, don’t give up hope. It is possible to get approval for a NJ mortgage with a low credit score.

What is considered a “bad” credit score to mortgage lenders?

Different lenders have different criteria for loan applicants. The lower your score, the more likely it is that potential lenders will see you as a risk. If your score is somewhere in the middle—between 620 and 740 (approximately)—there is a little more wiggle room. While you will likely face higher interest rates and be restricted in how much you can borrow, you should still be able to secure a mortgage loan without much issue. Generally, if your score is under 620, you will not be able to get a loan from a traditional lender. But that doesn’t mean you have no options for getting a loan; it just means you will have to go through less traditional lenders.

Private Lenders

One option for borrowers with low credit scores is to go with a private lender. Mortgages through private lenders often come with higher interest rates and more substantial minimum down payments for borrowers with bad credit. You also may have to do a little more work with a private lender, like providing additional paperwork that is typically not required with a traditional lender. It’s important to do your due diligence when going through a private lender. Shorter payback periods and higher interest rates can make it difficult to make your monthly mortgage payments. Make sure you will be able to make timely payments in full for the duration of the loan.

FHA Loans

Another possibility is a Federal Housing Administration (FHA) loan. If your credit score is at least 580, you can qualify for an FHA mortgage with 3.5% down. With a score between 500 and 580, you will need to put at least 10% down. The cutoff for credit scores with an FHA loan is 500. Downsides to an FHA loan include: high interest rates and a mortgage insurance premium of 1.75% as well as monthly insurance premiums. If you pay less than 10% of the loan for your down payment, you will have to pay these monthly insurance premiums throughout the life of the loan.

Mortgage Tips for Low Credit Score Borrowers

Sometimes it’s possible to make up for a bad credit score in other ways. You can offset the risk of the loan by offering to pay a bigger down payment. While first-time home buyers typically put down 6% or less, making a 20% or more down payment could encourage lenders to approve your application despite a poor credit score. Plus, the more money you put down, the lower your monthly payments will be.

Another option is to enlist the support of a co-signer. If you have a close friend or family member with a great credit score, they could help you secure a mortgage loan. This is not a commitment to take lightly, though. While the mortgage is in your name, the co-signer will be equally responsible for any payments. This means if you miss a payment, their credit will be negatively impacted. Working with a co-signer requires a lot of communication and trust.

#1 Way to Own a Home with Bad Credit

If your goal is to buy a property but your credit score is poor, the best thing you can do is take the time to rehab your credit score. The higher your credit score, the better chance you’ll have of working with a traditional lender. Working with a traditional lender means your down payment, interest rate and monthly payments will be lower. Regardless of your situation, Veitengruber Law can help you determine which path to home ownership is best for you.

Affordable Housing Options for NJ Seniors

NJ seniors

With the first wave of baby boomers turning 65 in 2011, the number of senior citizens in the United States is increasing. According to the US census, by 2030 the number of people 65+ will reach nearly 71.5 million. Most seniors live on fixed incomes and sometimes retirement savings or programs like Social Security can’t support their housing expenses. Because many of these senior citizens will need affordable housing options, the U.S. Department of Housing and Urban Development (HUD) has been increasing their initiatives to help seniors manage their cost of living in retirement.

 

Reverse mortgages are an increasingly popular option for seniors who still have equity in their current home and are looking to supplement their retirement income. If you are 62+ and have paid off your mortgage or paid off a significant amount of the loan, you may be eligible for a reverse mortgage. Under a reverse mortgage, instead of making monthly payments to the lender, the lender actually makes payments to the borrower. The borrower must still make regular payments on property taxes and homeowners insurance. This allows retirees to use the wealth they have accumulated in their homes to help cover their cost of living.

 

There are, however, a lot of reverse mortgage scams to watch out for. Some companies will outright lie to sell their services to unsuspecting and desperate seniors. The only reverse mortgage insured by the U.S. Federal Government is the Home Equity Conversion Mortgage (HECM). Through the HECM program, you will be able to withdraw some of your home’s equity. The amount available for withdrawal will vary from person to person and depends on the age of the youngest borrower, the current interest rate if your mortgage is not paid off, and the value of your home.

 

If you find it is impossible to stay in your current home, HUD also provides help for seniors looking to move into lower-income housing through senior housing vouchers, Section 202 supportive housing, and public housing.

 

The Housing Choice Voucher Program (HCVP) allows seniors to look for housing in the private sector amongst specific properties run by local public housing agencies including single-family homes, townhouses, and apartments. There are two kinds of vouchers: tenant-based vouchers, which move with the renter – and project-based vouchers, which are assigned to specific units and are not transferable. Typically, rent and utilities are calculated at 30% of the monthly adjusted gross income and the voucher will make up the difference in expenses. In order to find out if you or your loved one qualifies for this program, you will need to contact your local public housing agency.

 

Established in 1959, the Section 202 supportive housing program is the only HUD program specifically created to provide housing for seniors and those with disabilities. This program is designed to help seniors live as independently as possible while also offering assistance with daily living. Assistance can include dressing, bathing, housekeeping, and transportation. In this program, HUD provides loans to private and nonprofit organizations to finance the building and management of supportive housing services along with rent subsidies for residents. Typically, seniors that are 62 or older and have a very low household income (the average yearly income for Section 202 residents is $10,000/year) are eligible for this program. To apply, you will need to contact the individual housing community you are interested in.

 

Public housing for seniors includes high-rise apartments and duplexes that are operated by the local public housing agency. In this program, seniors will typically spend about 30% of their household income for rent and utilities. It is important to note that due to the limited resources available to HUD and local housing associations, there are typically long waiting lists for public housing. That is why is it important to be proactive and get in touch with your local public housing agency in order to determine your eligibility and explore all of your housing options.

 

Veitengruber Law is ready to offer expert advise on housing solutions for NJ seniors. Our goal is for you or your loved one to age in comfort and security. If you are looking for housing options for yourself or an aging parent or relative, it is important to know what resources are right for you. Call us today for your free consultation.

Understanding Your NJ Mortgage Contract

NJ real estate attorney

Besides the possible decision of choosing a college, getting married, and the myriad of decisions that come along with having children, purchasing a home is perhaps one of the most momentous decisions you’ll make in life. It will almost certainly be your most expensive purchase. Our own human desire for control tempts us to turn to our own intuition when working through challenges – thinking we can “do it all.” Though it’s not mandatory, seeking out a real estate attorney will smooth out the home buying process from start to finish and ensure that this important transaction is a positive one.

Working with Veitengruber Law on your New Jersey real estate transactions guarantees that every aspect of your real estate experience will flow smoothly. Real estate transactions are very complex, and many legal minutiae are involved in reviewing contracts and throughout the closing process. New Jersey real estate sales and purchases are very multifaceted and “high stakes” transactions. With any real estate transaction, a huge amount of paperwork is involved. A real estate attorney can decipher and explain the real estate “legalese” in laymen’s terms as well as make sure the transaction is fair and equitable.

Not utilizing a real estate attorney in conducting these important transactions could make room for potential mistakes resulting in an unsuccessful transaction such as:

  • Not thoroughly reviewing and properly drafting the real estate contract
  • Real estate disclosure documents being misunderstood and/or misinterpreted
  • Due diligence not being carried out when searching the title

Whether your NJ real estate purchase or sale is straightforward or more complex, it is always smart to have an experienced NJ lawyer look over the contract before closing. It is highly advisable to work closely with a real estate attorney when you’re involved in more intricate real estate transactions such as foreclosure sales, short sales and deed in lieu of foreclosure matters.

Promises made by the seller to the buyer, called “covenants” (i.e. repairing a roof) are only enforceable as long as the contract is in effect. Once the transaction is complete, these promises are no longer enforceable. The seller then has no obligation to the buyer to follow through.

Making sure you have a reasonable amount of time to review the documents prior to closing is very important. You don’t want to see these documents for the first time when you’re sitting down prior to the start of the closing meeting.

In some cases, you must bring certified funds, payable to yourself for payment at closing. An experienced real estate attorney can provide you in advance the amount you will need to have at closing. Your real estate attorney can also guide you in purchasing title insurance that protects you and your heirs for as long as you own the property.

When closing the title of a real estate transaction, the process can sometimes be overwhelming. Without an ex

perienced real estate attorney involved, an important step or steps could be missed in executing the deed successfully. Having a real estate attorney present when completing the closing paperwork ensures it is done correctly and the deed is accurate when signed over to the new owner.

Contact Veitengruber Law today for an experienced, reliable and trustworthy New Jersey real estate attorney and legal team. Get closer to living in your dream home with a lot less stress along the way.

Tips for Buying NJ Real Estate During the Competitive Summer Season

NJ real estateIt’s no secret that the NJ real estate market belongs to sellers these days. Homes don’t stay on the market long—one to two weeks in New Jersey, if you get lucky, and some are gone within a single day in the more desirable neighborhoods. If you’re preparing to buy a home during the popular and highly competitive summer season, you’ll have very little time to identify the home you want, submit your offer, and defeat all competing bids.

As daunting as the prospect might seem, there are compelling reasons to take the plunge as soon as you’re financially prepared to do so. With rents climbing relentlessly all over the country (not to mention throughout New Jersey) and mortgage rates showing no signs of reversing their matching upward trend, there’s little to gain financially by continuing to rent.

Although the inventory available for the number of prospective home buyers is not ideal, spring and summer are the busiest times of the year for home sales in NJ. Unless you want to move in the rain or the snow, it’s time to gear up to get out there and find the right home for you.


With inventory throughout the state being as scarce as it is, you may need to be willing to be flexible regarding the superficial aesthetics of a home.


When you imagine your dream home, it probably has all the latest upgrades, a certain type of kitchen layout, and glistening hardwood floors. Realistically, you will probably find that you can be fully happy with a home that needs a few upgrades over the next handful of years, gradually transforming it into the perfect reflection of your tastes.

We understand that enduring home renovations isn’t for everyone, but if you find a home in the style you like in the neighborhood you desire that only needs a few tweaks, you should seriously consider moving quickly and locking down the property in that area while you can.

Once you’ve found the home, of course, it’s time for the nerve-wracking process of winning out over the competition. Here are our best tips for ensuring that your offer is the one that stands out from the pack.

  1. Get preapproved before you start shopping.

You know your credit score, you’re sure your healthy income is entirely stable, and you know you have a very manageable level of debt compared to said income. However, the home’s current owner doesn’t have any of that information unless you show up with paperwork proving that you’ve been preapproved for the appropriate amount by a mortgage lender.

This act alone will make your offer more enticing to a buyer, clearly. Although you’d think buyers would realize they should have an offer to substantiate their bid, many prospective buyers still begin touring available homes without any kind of approval letter.

Submitting an offer accompanied by a preapproval is the only way to demonstrate that you’re a truly serious buyer, prepared to move quickly and decisively.

  1. Show up to see a home with a blank contract.

If you find the one, you’ll have no time to lose in placing a bid. Even an hour could make a difference between snagging a great home or missing your chance.

  1. Don’t submit an offer with a contingency contract.

Otherwise, your offer is going to get shuffled to the bottom of a thick stack of stronger offers. Try not to have any hint of hesitance or uncertainty. If you want a home, go for it as clearly and cleanly as you possibly can. If you aren’t sure, move along swiftly so you don’t miss out on the home that’s right for you.

  1. Arrive with the biggest down payment you can.

Average down payments have continued to rise, following trends that have become more entrenched over the last four years. Sellers are more likely to be attracted to larger down payments, often linking such offers to financial stability and a smooth transaction. While gathering funds for a strong down payment might be a pinch in the short-term, the payoff is likely going to be worth it.

  1. Don’t bid below asking.

It goes without saying that there are times when a home is priced far above what it’s really worth, and your real estate agent will advise you in such cases. However, in any of the hot New Jersey markets, you’ll need to stay within 5 – 10% of the asking price. Your agent is probably going to advise you to make a strong, bold offer for the home you’re sure you want.

Reverse Mortgage Foreclosures: Can They Be Stopped?

nj reverse mortgage

What are reverse mortgages?

Reverse mortgages allow homeowners ages 62 and up to borrow against the equity of their primary residence to receive a loan in the form of either a revenue stream or a lump sum of money from their lender. In order to be eligible for a reverse mortgage, homeowners must first meet a few basic requirements.

The homeowner(s) have to be at least 62 years old and either own their home outright or have a very strong equity built up and owe very little on their mortgage. They must also occupy their home as their primary residence and hold the title to their home. While they typically get a bad rap, reverse mortgages oftentimes provide senior citizens with a valuable and much-needed source of funding to assist with a wide variety of needs that can occur with aging.

Some common reasons seniors seek reverse mortgages are to:

  • Finance a child’s college education
  • Pay for necessary medical expenses and bills
  • Fund home repairs and remodels
  • Supplement social security income to maintain an adequate standard of living throughout retirement.

It is worth noting that while the homeowner gets to remain living in their home and keep the title to the home as collateral, they are still required to pay all necessary taxes, property maintenance and repair costs, homeowner’s insurance payments, and interest and fees on their loan.

What happens if circumstances change?

While reverse mortgages can be a feasible and even financially sound option for certain people, there are some potential pitfalls to take into consideration before ever opting for a reverse mortgage in the first place. It is important to understand the specifics of what you are undertaking as a homeowner. For instance, a reverse mortgage is immediately owed back to the lender upon the occurrence of any of the following circumstances:

  • The borrower(s) decide to transfer the title or sell the home and succeed in doing so.
  • The borrower(s) reside elsewhere for over a year, thereby relinquishing the primary residence status of the home in the eyes of the lender.
  • The borrower(s) fail to meet the terms and conditions of the mortgage; for instance falling delinquent in homeowner’s dues or property taxes, or allowing the condition of the property to substantially deteriorate.
  • The borrower(s) pass away.

If in the near future you are considering moving, living away from your home for more than a year, or if you currently have a terminal illness, you may want to look into alternatives to a reverse mortgage so that you do not leave your loved ones in a bad financial situation upon your departure.

IMPORTANT NOTE: Once the reverse mortgage becomes due for any of the aforementioned reasons, the homeowner(s) (or their heirs) are legally liable to pay back the lender in full, including any applicable taxes and fees.

Can a reverse mortgage foreclosure really be stopped?

If you find yourself or your loved ones on the verge of a reverse mortgage foreclosure, you are not entirely without viable options. Contact a NJ real estate lawyer or foreclosure defense attorney who can help determine if you are eligible for a reputable loan modification on the reverse mortgage. There is also the option of selling the property yourself or allowing a relative or friend to pay off the remaining balance owed on your reverse mortgage.

A real estate attorney with experience in NJ reverse mortgage foreclosures will be best equipped to help answer any questions you may have and help you weigh the pros and cons of all your options. They will walk you through every step of the decision-making process with the end goal of ultimately helping you avoid a reverse mortgage foreclosure.

Why Post-Sheriff’s Sale Mortgage Modifications are Unicorns

mortgage modifications

Homeowners who have found themselves struggling to make their mortgage payments may end up in foreclosure sooner rather than later. Even missing a few payments, even if you then get back on track, can cause some lenders to initiate foreclosure proceedings.

It’s true that it can be easier to ignore a potential “foreclosure warning,” even if you know you’re behind on your mortgage. Believe us when we say that burying your head in the sand is something A LOT of people do. The problem with this coping technique is that it almost always ends up with the homeowner losing their home to foreclosure – even if that is not what they want.

If you’ve found yourself at risk for foreclosure, it’s important to seek help NOW from a NJ foreclosure defense attorney before your home is foreclosed by your lender. Once your home is sold at Sheriff’s Sale, it is much more difficult to redeem your mortgage (read: get your home back).

When a property has already been foreclosed upon and the Sheriff’s Sale has passed, the original homeowner has ten (10) days to redeem the mortgage. As you can imagine, ten days is a very short period of time for any legal process. (NJ foreclosures fall under the category of “judicial foreclosures,” which means all documentation and proceedings must go through the New Jersey Court system.)

Because the ten-day time limit post-Sheriff’s Sale is so painfully short, we often say that a mortgage modification after foreclosure sale is a unicorn. They are rare, hard to accomplish, and almost impossible to find examples of.

UNLESS…

You can increase your odds of being approved for a mortgage modification after foreclosure sale – and that is by filing for bankruptcy. In New Jersey, filing for bankruptcy gives foreclosed homeowners sixty (60) days post Sheriff’s Sale for redemption.

Sixty days is a whole lot better than ten days! In two months, Veitengruber Law can help you apply for and obtain a mortgage modification even after your home has been sold at Sheriff’s Sale. HOWEVER, the odds of success of receiving a loan modification within that 60 period is fairly low.  It requires the homeowner to be organized and diligent in document production. It also may require a short sale or a hard money loan (or 401K loan, pension loan, or personal [family] loan).

A mortgage modification is necessary because your previous monthly mortgage payment was obviously too high. Redeeming (re-assuming) your mortgage as is will only end badly. You also have the option to attempt to sell the home via sale, short sale or Deed-in-lieu.

For whatever reason, if you don’t want to file for bankruptcy, the chances of saving your home via redemption after the foreclosure sale are low due to the ten-day bankruptcy guideline and you will have a relatively short amount of time to vacate your home after the sheriff sale occurs.

On the flip side, homeowners who proactively approach a foreclosure defense attorney before their home has sold at Sheriff’s Sale have a much better chance of being approved for a mortgage modification. This will allow you to keep your home without struggling so hard to make your mortgage payments, as they will be reduced to fit within your budget. Once you are approved for a mortgage modification, your foreclosure case will be closed.

NOTE: If your home is scheduled for Sheriff’s Sale within 37 days or less, you will need to file for bankruptcy in order to apply for a mortgage modification. This is further proof that taking action as soon as possible is best if you want to keep your home. When you come to your NJ foreclosure defense attorney more than 37 days before your Sheriff’s Sale, you’ll have more options, and you will not have to file for bankruptcy.

 

 

NJ Mortgage Down Payment Help: The Family Gift Option

You’re ready to buy your first home but lack a sufficient down payment. With a stable income and a solid credit score, your lack of a down payment need not prohibit you from purchasing a home. There are several feasible financing options available, including a few you likely haven’t yet considered.

In addition to certain conventional loans, FHA loans and VA loans are programs that offer very low down payment options. It is also a common misconception that most conventional home loans require a down payment of at least 20% of the purchase price of the home. In most cases, you will still be able to purchase a home without the 20% down payment. The caveat with most conventional loans is that you may be expected to pay private mortgage insurance (PMI) to help protect the lender until you have obtained 20% equity in the home.

FHA and VA loans do not require private mortgage insurance and have low down payment options, but have more specific eligibility requirements. If you have parents or relatives who are financially secure and willing to help you with a down payment, consider asking them to gift you the funds. This may be the most convenient option of all. It is relatively simple and efficient to incorporate the family gift option into the processing of your mortgage.

Many different mortgage programs allow for a family gift option in the financing of your home as long as a few basic requirements are met. Conventional loans and FHA loans both typically allow for the family gift option.

Proof of relationship

While the funds gifted to you don’t necessarily have to be from a family member, if they are not from a close relative, you may have to prove that the relationship is a close one in order for the lender to accept the plausibility of them gifting you the funds. Make sure the contributor of your funds understands that they may be liable for a gift tax depending on the amount of funds they are giving away. It is always wise for your donor to obtain legal advice in this situation –  especially when gifting a substantial sum of money. When handled properly, they may actually be able to avoid any tax liability.

Signed proof of gifted funds

The lender will also require a legal document (this letter is customarily provided by the lender) to be signed by both parties that states that you will not be expected to repay your family member for any of the down payment funds gifted to you, and that it is truly a gift and not an interpersonal loan of any kind. This letter helps protect you immensely as a buyer.

Obtain funding from family

Once you have met with your lender and consulted with a NJ real estate lawyer to determine your best options, your donor will need write you a check for the funds to be deposited into your bank account. The mortgage underwriter will then make sure the funds provided by your family member are well-documented and that you can proceed smoothly with the rest of the financing process.

If you are fortunate to have generous family or friends to gift you a down payment, please let them know just how grateful to you are. It may be the most valuable gift you ever receive from a monetary standpoint, as well as a gift that will help to establish your financial security for the rest of your life.

What Does the Recent Tax Reform Mean for the NJ Real Estate Market?

It is not a “Happy New Year” for New Jersey residents and prospective homeowners when it comes to the new tax plan that was unveiled at the White House last week. Essentially, a tax increase is the way these homeowners are starting 2018, as the cap on state and local tax deductions is now $10,000. Not only did taxes go up, but the state housing market is also affected.

New Jersey residents pay one of the highest tax rates in the federal government but experience one of the lowest returns of federal spending of any state. At the center of the first federal tax code reform in 31 years is a steep corporate tax cut that proponents of the legislation hope will unleash the nations’ economy. Of course, to make up for dramatic corporate tax cuts, deductions are placed under the microscope. Unfortunately, some of these targeted deductions have been particularly beneficial to New Jersey residents in the past.

If a current or prospective homeowner was paying $10,000 with pre-tax dollars and they’re now paying $14,000, in reality they will have to pay about $5,000 to pay the additional difference of $4,000. Fourteen thousand dollars in real estate taxes doesn’t compare with the top 5 New Jersey towns when it comes to their 2016 Average Residential Tax Bill. The municipality of Tavistock comes in at number one with the 2016 average bill at $31,132.

As a current homeowner, you may wonder how this will affect your property value. The landscape doesn’t look very green. Nobody knows for sure; as real estate markets are affected by more variables than just real estate taxes. The most affected consumer lives in 1 of 7 New Jersey counties that make up the top 10 in the United States. These are the consumers who will lose the most in home prices across the nation.  At the top of the Average House Price Decline list is Essex County which will take a hit of 10.5%.

Some grim scenarios propose that high-income residents would migrate to other states, a slowdown in home sales would affect contractors and home building businesses and stores, and the already high-taxed state would see even higher taxes.

As mentioned before, there are many factors that enter into the real estate market and New Jersey realtors must continue to sell the same way even with the uncertainty created by the new tax plan. With a low-inventory market or, in other words, when there are more buyers than sellers, and when you write off your full real estate tax amount, the real estate market is much more stable. It has been considered a sellers’ market for some time now with sellers getting considerably more than just their asking price in many cases. Eager buyers may now delay making a move from renting to buying or purchasing a bigger home for their growing family. Those who invest in real estate and current landlords will be able to pass along these tax increases to their tenants.

Normally, if the economy holds steady, the real estate market follows suit or self-corrects. Of course, the true impact won’t be known until spring has sprung and the real estate market begins to bloom.