4 Financial Goals to Hit Before You Start Your NJ Home Search

While owning a home is an integral part of the traditional “American Dream,” getting your finances in that sweet spot that allows you to comfortably purchase a home can take years. It can be tempting as you inch closer to your goal to start your house search before you are truly ready. But you likely won’t be able to snag your dream home—or be able to pay for it—if you miss the mark on your financial planning. Here are some financial goals you should accomplish before you even begin your home search.

1. Curb Excessive Spending 

Avoid extravagant purchases in the year or so leading up to when you want to start your house search. Buying a car or going on an expensive vacation can cause you to accumulate a large amount of debt quickly, which will negatively impact your debt-to-income ratio. This ratio is an important part of your credit score and can cause your score to decrease a lot in a short time frame. Even after you are preapproved for a mortgage, you will need to keep your debt-to-income ratio relatively steady throughout the home buying process.

2. Build (and Uphold) a Respectable Credit Score

All lenders will take a look at your credit score before pre-approving you for a loan. A positive credit score means you are less of a risk since you have a proven record of paying off your debts on time. So if you do not have good credit—or if you don’t have any credit at all—you should start working on that post-haste. Sign up for a free credit monitoring service and check your score regularly to confirm your number is increasing over time. This will also help safeguard against fraudulent activity that can impede your home buying plans.

3. Maintain Steady Employment

Job hopping can be just as detrimental to your mortgage prospects as bad credit. Lenders want to be able to forecast your income. Steady paychecks from a salaried job is the preference of most lenders. While a career change does not automatically mean you will not be approved for a mortgage, you will likely have to provide extra documentation to prove you have a stable income.

4. Limit Extra Monthly Expenses

Cut down on monthly expenses outside of your basic needs. Subscription services, from grocery delivery to extra channels added to your cable plan, are convenient. But the price you pay for this convenience can cut into your plans for home ownership. Go grocery shopping instead of eating or ordering out. Monitor your utility usage. Even small changes in your month to month expenses can add up big time to help you reach your real estate (and other financial) goals.

If you think you are finally ready to start looking for your dream home in New Jersey, Veitengruber Law can help. We can connect you with experienced real estate experts and provide legal advice throughout the home buying process.

Understanding the Legalities of Buying a Home in NJ

Buying a home is a huge responsibility! Accordingly, there are a myriad of rules and regulations that guide the real estate purchase process. Understanding the legal details can save you major stress and headaches, which is why it is a good idea to hire a real estate attorney to help you through unscathed. Here are some legalities to keep in mind if you are thinking of buying a home in NJ.

1. Attorney Review

New Jersey is an attorney review state. This allows a 72 hour review period starting when an offer is made official. Both buyer and seller are encouraged to have their attorney review the offer and provide their legal opinion on the terms of the sales contract. During this period, the sales contract can be amended or terminated entirely without penalty.

2. Deposit of Funds

After the contract has been accepted and signed by both parties, the buyer is required to pay a good faith deposit to the seller. This deposit can be made through the seller’s attorney or an entrusted broker.

3. Disclosures

New Jersey real estate laws do not require sellers to disclose specific information. However, in order to protect the buyer, courts can compel sellers to disclose hidden defects of the property. If the seller is aware of any defects and fails to disclose them to the buyer, the buyer can sue the seller to be rightfully compensated.

4. Inspections

The best way to protect yourself from having to take future legal action resulting from a real estate purchase is to have all suggested inspections performed. This is doubly important if you are being financed by a mortgage lender. Most NJ real estate attorneys suggest the following inspections: radon, termite, lead paint and asbestos, as well as a general inspection to determine the overall condition and safety of the house.

5. Legal Documentation

The seller is legally required to provide specific certifications to the buyer. These documents include a certificate of occupancy, flood search, septic certification, well certification, and buried oil tank certification. These certifications verify the functionality of these systems and disclose important information to the buyer.

6. The Closing Process

Your attorney is responsible for ensuring that the title of the house includes no legal encumbrances by conducting a title search. The settlement date (aka “Closing“) will be scheduled once the title search has been completed. At settlement, the title of the home and its insurance will be legally changed to the buyer’s name and the final cash amount is calculated and paid by the seller. Your attorney will record the transaction and keep record of the title deed for you.

Buying a home is likely to be the biggest investment you’ll make in your life. Veitengruber Law can offer sound legal advice allowing you to make your big investment with peace of mind. Don’t hesitate to reach out if you’re thinking of making an offer on a NJ real estate property in the near future.

The Biggest Mistake You Can Make While Saving to Buy a Home

money mistakes

When you are in the market to buy a home, the more savings you have, the better. Between closing costs, your down payment, and other home buying expenses, the out of pocket cost of buying a house can add up. It can be tempting to use your hard earned savings, a retirement fund, or even your emergency funds in order to have sufficient funds for a down payment. But cleaning out your savings to buy a home is a very bad idea—and here are three reasons why.

1. Unexpected Expenses

After you buy a home, you will need a strong emergency fund more than ever before. Your emergency fund should include at least three months of expenses saved in the event you lose employment. For a homeowner, that’s at least three months of mortgage payments, homeowner’s insurance, home maintenance, utilities, and all the little expenses that add up when you own a house. If you use your emergency savings to buy the house, you may not be able to absorb the costs of any unexpected repairs that pop up down the road. Tapping into your emergency fund to pay for your down payment or closing costs could leave you high and dry.

2. Continuing to Save, Even After Becoming a Homeowner

If you have to clean out your savings accounts in order to purchase a home, chances are you can’t actually afford the home in the first place. As soon as you sign your name on the closing paperwork, you’ll be responsible for a whole heft of new expenses, including your monthly mortgage payment, homeowners insurance, property taxes, indoor home maintenance expenses, exterior maintenance (ranging from lawn care to snow removal and SO MUCH in between), and utilities. Will you still be able to contribute to your savings account on top of these new expenses? While you may be able to afford the out of pocket expenses to buy a home on paper, if buying the home means you cannot afford to keep saving in the future, it isn’t a good financial choice. You are better off waiting to buy a home until you are in a position to purchase a home without touching your emergency savings AND keep saving.

3. Becoming “House Poor”

If you’re like most Americans, your savings fund isn’t just for emergencies—it’s also where you build up enough money for vacations, to travel to visit family, or to refresh your spring wardrobe. A house might seem worth the sacrifice now, but know that the excitement of a new home will wear off just like everything else. You don’t want to be scraping by to survive and lose the ability to enjoy other aspects of your life. Roughing it out in an affordable rental for a few more years while you save more money can allow you to continue living your preferred lifestyle while still working towards the eventual goal of homeownership.

Buying a home is exciting and it can be tempting to go for broke to finally have your own place. We recommend that you keep building your savings until you are truly ready to purchase a home. Not sure if you’re ready? Reach out to Veitengruber Law and we can tell you straight up if you should go for it now, or if you’re truly better off waiting.

New Jersey Real Estate Negotiating Mistakes

new jersey real estateEvery buyer hopes their initial offer on a home will garner an immediate “yes” from the seller. While this does occasionally happen, the reality is an initial offer is just the first step in a sometimes long (and sometimes nail-biting) process between buyer and seller. If you want a leg up in the negotiating process, here are some common mistakes to avoid.

1. Showing Your Hand Too Soon

When you are negotiating the sales price of a home, you’ll want to have a pre-approval letter showing sellers that you have financial credibility and can afford the houses you are looking to buy. But be sure that you do not provide sellers or their agents with a pre-approval letter that lists a price for more than the list price of the home you are looking at. If your current pre-approval lists a higher price, ask your lender to adjust the letter to match the amount you intend to offer on the home.

2. Making an Offer That is Too Low

You might be in the market for a deal, but coming in too low has the potential to offend a seller and cause them to reject your offer outright. A good first offer might not always receive an immediate yes, but it should at least open the door for negotiation. Your agent will be able to show you a comparative market analysis to help inform your offer. If you really want the house, it is advisable not to make an offer less than 10% below asking price.

3. Insulting the Home

A seller often has an emotional attachment to the property that’s up for sale. This may be the place they raised a family, their first home with their spouse, or even a childhood home. So if you think you can insult the property in order to justify a lowball offer, think again. Most sellers don’t want to hear about how the aesthetics of the property aren’t to your taste. If there are some legitimate concerns with a property, be sure to balance these points with things you love about the property. If the seller knows you see the value of their property, they will be more willing to negotiate.

4. Getting Stuck on the Sales Price

Many buyers tend to focus on the list price to save some money, but there are many other different ways to get a great real estate deal. If a seller isn’t willing to budge on sales price, see if they will pay for all or part of your closing costs, speed up closing, or agree to a rent-back agreement that will allow them to stay in the house past closing if they haven’t yet found a new home. All of these things can be attractive to a seller and could push them to accept your offer.

5. Ignoring How Long the Home Has Been Listed

If a house has been on the market for less than a month, you should make a competitive initial offer to open the door for negotiations. If the home has been on the market for over 90 days, you have a little bit more power in presenting a lower offer.

An experienced real estate agent will know the market and be able to lead you in the negotiating process. Once you are through the negotiating process, Veitengruber Law will be there to look over your contract and make sure the terms you have negotiated are legally presented.

NJ Real Estate: How to Make a Successful Lowball Offer

When it comes to purchasing a home, buyers always want to know: How low is too low for an initial offer? Money conscious buyers are looking to save, but they also don’t want to risk offending a seller with an offer than is too low. So how much below asking price can you really offer? Here are some examples of when it would be acceptable to put in a low ball offer.

Offering even 1% to 4% below asking price can save you thousands of dollars depending on the price of the home. While this might not seem like a lot in the grand scheme of things, it could impact your mortgage payment by a couple of hundred dollars every month. Offering below list price in this range is a good idea if there are multiple offers on the table.

If you are thinking of offering 5% to 10% below asking price, you should have comparable sales as negotiation tools to justify your lowball offer. If other homes in the area have additional features but are priced the same or lower, that’s a great argument for offering less. You could also offer 5% to 10% less if the house has been on the market for several weeks without much interest or if it is a buyer’s market.

When you ask for 11% to 19% off the price of a home, you could save tens of thousands of dollars. This offer is reasonable when some aesthetic updates need to be made, but the house is otherwise in good shape. If the house is straight out of the 70s or needs new flooring in a few rooms, this is a great negotiation tool. If you know the seller is desperate to sell due to financial or personal circumstances, you could throw out an offer in this range and see what happens.

An offer that is 20% or more below the asking price, must be justifiable with some good, solid reasons. A multitude of factors will go into negotiating this offer. A strong buyer’s market and a house that has been on the market for six months or more are good indications a seller will accept a significantly lower offer. If the home is in bad shape and needs extensive repairs, you have a lot of room for negotiating a listing price down. Significant repairs would include a roof that needs to be replaced, foundation issues, or if the electrical, plumbing, or heating systems are not up to code.

A skilled NJ real estate agent will be able to guide you as you determine what is a reasonable offer below asking price. It is possible to get the home of your dreams while still getting the best deal possible.

As always, if you need guidance in this area, Veitengruber Law can direct you to one of the many NJ realtors within our professional network. Once you have made an offer, we will review all paperwork and contracts to ensure that you truly are getting the best deal possible!

Top 5 Factors That Impact NJ Real Estate Prices

new jersey real estate

Currently, the median home value in New Jersey is $342,527. If you are selling or buying a home, it is important to understand what factors go into determining a home’s value and how these factors impact list price. Here are some tips that can help you ascertain the value of your home.

1. The Big Three: Location, Product, and Timing

How well a home has been maintained and where it is located impacts the value of the home as a product. The right home in the right neighborhood can go a long way to drive up home value. Timing is harder to control. If you are selling, you want to list when the market is in your favor—but the market can change quickly.

2. Structural Integrity

Appraisers will perform a detailed physical inspection of the entire house – floor to ceiling and wall to wall. An appraisal inspection is meant to note not just superficial imperfections but also serious structural issues.

How well the home was originally constructed (and updated, if applicable), as well as the quality of the materials used, will impact an appraiser’s assessment of a home’s value. Even small details are given consideration. They will compare these details to homes in the area and adjust pricing according to specific similarities and differences.

3. Market-Driven Features

Every localized real estate market is going to have specific home features that impact the value of a home. Marble counter tops were a luxury ten years ago—they are the norm now. Consumer preferences drive expectations of required home features. If sold homes in your area boast open floor plans, gray scale interior colors, and hardwood flooring, this will set the bar for how your home will be valued.

4. Condition of the Home

Take care of any maintenance or small projects you have been avoiding. Fresh paint, manicured landscaping, and clean spaces will go a long way to showing off the full potential of your home. Make sure all the appliances you are selling with the house work and can pass inspection. You want to make sure your home looks like the most appealing home on the block.

5. Size and Appeal

Traditional layouts are big draws right now. Open floor plans and neutral color schemes are too. In matters of real estate, at least, size matters. Price per square foot is a popular search filter used by a multitude of potential buyers.

If you are a buyer, you can keep all of these factors in mind as you look for your future home. When you are trying to figure out how much you are willing to spend on a specific home, be realistic. It is common for buyers (and sellers) to think with their stomach and not with their head when it comes to estimating the value of a home. Remember that if a home appraises for under the contracted sale price, the sale could fall through. No matter how much value you personally put on a home, that value has to be backed up by the market.

If you’re ready to make a move, Veitengruber Law is ready to help you achieve your next real estate goal.

Why Does My Escrow Payment Keep Going Up?

If you have a fixed-rate mortgage, you might be surprised to find that your monthly payment has increased on your most recent bill. If you’ve noticed an increase in your bill, chances are you should look to your escrow payment. Your escrow payment may increase from time to time, but if you notice a steady increase, it is important to understand why.

In relation to real estate, an escrow account is a portion of a homeowner’s monthly mortgage payment that is deposited into an account meant to cover mortgage-related expenses like insurance and property taxes. Your escrow account is set up at the time you take out your mortgage loan. There are some instances where a homeowner can potentially opt out of an escrow account—like if you put more than 20% down. But in most instances, a lender will insist on the inclusion of an escrow account to ensure that essential payments are made. If you do not have an escrow account, you will be required to make sure you are paying for the payments typically covered by an escrow account.

When you get a mortgage loan, your lender will set up an escrow account for you. Your monthly escrow payment will be based on an amount that will cover your homeowners insurance, property taxes, and any required reserves. Once your lender determines the cost of expenses to be covered by your escrow account, they have 45 days to provide you with a statement outlining what the payment will be and when they are due. There are limits to how much money your lender can require you to pay in escrow.

Your lender recalculates your escrow payment yearly. There are three reasons your escrow payment may increase: 1) your homeowners insurance premium has increased, 2) your property taxes have increased, and 3) your servicer previously miscalculated your fees. If your lender determines your monthly payment needs to change, it will be explained in your yearly escrow analysis.

It is also possible that you could have an escrow shortage.  This is when the money in your escrow account is insufficient to cover the cost of your mortgage-related expenses. When your escrow account is short, your mortgage provider will give you notice along with an explanation. Even if the shortage is not your fault—for instance, your property taxes increase—it is still your responsibility as a homeowner to make the payment. To cover the cost of the shortage you can either pay the amount in full or make higher monthly payments.

Your escrow account protects your lender in the event that you cannot pay expenses related to your mortgage, but it can also protect you as a homeowner. There are plenty of consequences and penalties you can face if you are unable to pay your property taxes or homeowners insurance. Monthly escrow payments allow you to spread these expenses out, making it easier to budget and preventing you from falling behind on payments.

While your mortgage payment and interest may remain the same, your escrow payment can vary from year to year. Don’t let this increase take you by surprise. Prepare for these changes by paying attention to communications from your mortgage lender and staying on top of your property taxes and homeowners insurance.

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.