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.

Make an Offer on Your Dream Home or Save for a Down Payment?

 

You’ve finally found your dream home and you think you’re ready to buy, but unfortunately it’s not as easy as ringing the doorbell and claiming the house. The decision to buy can be the start of a tricky dance between buyer and seller, typically with real estate agents acting as mediators. Your agent will be able to help you with questions you may have on the potentially daunting process of buying a future home, but this guide can help you get started.

When is the “right” time to buy a home?

Deciding on the right time to make an offer on a house can be an intimidating task, especially if the house appears to have all you ever wished for and more. Because a down payment can be an important part of buying a home, you need to be aware of your borrowing capabilities with and without a down payment when making a home purchase.

What is a down payment?

A down payment is a specific portion of the total cost of the house that the lender requires you to submit up front in order to qualify for a mortgage loan. The more money you are able to apply towards the down payment, the lower your interest and monthly mortgage payments will be. It is ideal if you can save up an amount that is at least 20% of the home’s price.

Is a down payment required?

Without question, it’s vital to wait to make an offer until you have a handle on your finances, as it makes the buying process easier. When you make an offer on your dream home, you should know how much house you can afford – meaning you’ve been pre-approved to borrow a set amount of money from a lender. Sellers are inclined to go with buyers who make a solid offer and have proof of exactly how they’ll come through on that offer. Depending on your finance history, credit report, asking price of the home and requirements set out by your lender, you may not be required to make a 20% down payment.

What is earnest money?

Most likely, you will be required to submit an “earnest money” check or money order, which will be held in an escrow account until closing, if the seller accepts your offer. Earnest money is a good faith deposit that the seller requests before they agree to sell their house to you. This deposit shows that you are serious about purchasing the house and that you are most likely financially capable of following through with paying off the house. The earnest money deposit (EMD) is typically listed on the Multiple Listings Sheet (MLS) and is usually submitted with the offer. Because it is possible to lose your EMD, it is recommended not to submit a higher EMD than what the seller lists on the MLS. The EMD can be lost if your contract with the seller is breached without an acceptable reason or if another potential buyer’s offer is accepted over yours.

How can I avoid losing my EMD?

 

Real estate breach of contract happens all the time – and it’s usually not something that the buyers could have seen coming on their own. Although your real estate agent is an expert in selling homes, it’s possible that they aren’t as versed in real estate law as a NJ real estate attorney. Trust in your real estate agent, but once you have a contract in hand, it is always wise to have it reviewed by your favorite real estate lawyer.

Working with both an experienced real estate agent and a real estate attorney won’t guarantee that you’ll land the home of your dreams, but it will increase your odds. Do you have questions about your real estate contract? Fill out this simple form and have your questions answered by a professional and experienced New Jersey real estate attorney.