NJ Real Estate: Refinance My Mortgage or Sell My House?

With historically low interest rates and high property values, many homeowners are thinking about either refinancing their mortgage or selling their home. But which one is the best option in this market? The answer will depend on your specific situation and what kind of credit, debt, and income you bring to the table. Here are some things to think about as you weigh your options.

1.   Can you find a lender that is offering a lower rate?

Every lender is different. It is important to shop around as much as possible when you are looking into refinancing or getting a new mortgage loan. You also need to keep in mind that rates can vary widely even within the same company depending on what kind of loan you are looking at. Lenders tend to charge less interest on 15-year fixed mortgages than 30-year fixed mortgages, for example. And if you are planning to simply refinance instead of getting a new loan, rates are typically even higher. You may have to try a few different lenders to find the opportunity that is right for you financially.

2.   Are these potential new loans actually better than your existing mortgage?

Lower rates are awesome, but they aren’t everything when it comes to saving money on your mortgage. What kind of loan you qualify for is just as important. Your lender will be looking at your total financial picture to get an idea of what kind of loan you qualify for. If you are in a better financial standing than you were when you applied for your current loan, you could qualify for a better mortgage rate AND a better type of loan—a fixed rate instead of a 30-year variable rate, for instance. If, however, your income has decreased and you’re carrying more debt, it is not likely you will get a better deal on a new or refinanced loan.

3.   What is your loan-to-value ratio?

Your loan-to-value (LTV) ratio compares the amount of mortgage loan with the current estimated market value of the property. If you need a $150,000 loan to pay for a $200,000 home, you have an LTV ratio of 75%. When you refinance, you are most likely cashing out the equity you have in the home or adding closing costs to the overall cost of the mortgage, which will lower the LTV ratio. The lower your LTV ratio, the better interest rate you will qualify for. On the other hand, if your LTV ratio is higher (typically above 80%) or your home’s value is less than what you owe on the home, your LTV ratio will qualify you for the highest interest rates possible and you may not even be able to refinance or purchase a new home at all.

4.   Can you afford closing costs and other fees?

If you are leaning towards selling and purchasing a new home, you need to have the cash on hand to cover closing costs, fees, and any other home-buying expenses. These tend to total about 3% to 6% of the loan total. You will also need to have money for a down payment. Selling your existing home can help towards these costs, but with home prices today it is important to make sure you will have the money to cover the costs of buying a new home.

If you are still confused about all the numbers, the best thing to do is reach out to a refinancing expert and/or an experienced real estate attorney. These insider experts can help you compare savings to determine which option—if any—is the right one for you.

Can I Sell My Home If I’m Behind on My Mortgage?

If you have fallen behind on your mortgage payments and cannot find a way to catch up, you may think selling your home is the only way to get on top of your finances. As long as your lender has not foreclosed on your home yet, you still have the opportunity to sell your home and get out from under your mortgage. But in this situation you need to move quickly and decisively. Here is everything you need to know about selling your home after you have fallen behind on your mortgage payments.

The foreclosure process will start soon after you begin to miss mortgage payments. Even missing just one payment can cause you to receive a foreclosure notice in the mail. After you are more than 120 days late, your lender is legally able to reclaim your home and sell it in order to recoup their money. At this time, you will be forced out of your home. The foreclosure will also appear on your credit report and can drop your credit score drastically, impacting your ability to get future lines of credit. Fortunately, you have up until the actual day of foreclosure to sell your home on your own.

Even if you think you are heading towards foreclosure, you can still get in front of your situation and take financial control back. How you go about selling your home before foreclosure depends on whether your house is worth more or less than what you owe on your mortgage. You will be able to sell your home and use the profits to pay back your lender as long as the fair market value of your home is greater than what you still owe on your loan. Taking this path will look much like the steps you would take to sell your home at any time: find a real estate agent and hope you receive acceptable offers on your home. You will not normally need to get your lender’s permission to sell your home like this.

If you find your home is worth less than the amount you still owe your lender, you will need to sell your home as a short sale to avoid foreclosure. A short sale is when you accept an offer on your home that will not cover the full amount you still owe on your mortgage. You will need to get the approval of your lender in order to go down this path, however this may be difficult. Lenders automatically lose money on short sales so they may not be eager to approve. You will need to submit a hardship letter explaining why you can’t make your mortgage payments and evidence to support this claim.

Many lenders will eventually accept your short sale offer as long as you meet specific demands to help meet their bottom line. You might find yourself responsible for repairs and many closing fees so you need to decide if you want to take on these costs (and if you can even afford to do so). Your agent and real estate attorney will be able to help you negotiate these terms. A short sale will do much less damage to your credit than a foreclosure and will allow you to stay in the home until the sale is completed.

If you are behind on your mortgage payments, but you want to stay in your home, there are also other options besides selling or foreclosure, like mortgage forbearance or mortgage modification. Veitengruber Law can help you find the right solution for your specific situation.

Starting a Small Business in NJ: Do I Need an Attorney or CPA?

 

It’s the quintessential American dream to own a successful business. No matter what product or service(s) you’re eager to provide, every empire starts somewhere. While the popularity of Shark Tank has captured the spirit of the American entrepreneur, the statistics for success are quite grim. Over 627,000 new small businesses are started each year; however, 535,000 businesses close each year. To help your small business in NJ beat the odds and become a fixture of growth, it is important to start off on the right foot. Knowing where to begin is not always easy. You’ll need to hire the right professionals to help you navigate New Jersey’s complicated tax and business laws.

As a business owner, you’re the salesman, head of marketing, technical support provider, customer service representative, bookkeeper, debt collector, human resources department, and CEO. You need to either be an expert in each area or hire people with the expertise you need.

 

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How to Jump-start Your Business

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STEP 1: Decide on a business structure.

Some common business structures are sole-proprietorships, partnerships, limited liability companies (LLC), corporations, non-profits, and cooperatives. You can review the specifics here. This is a crucial decision, and making the right one without being informed would be a grave mistake. For this first step, you should consult with both an attorney and a CPA. Veitengruber Law can help advise you on what type of structure would best suit your business model. A CPA will advise you on how to minimize your tax burden when choosing a business structure.

 

STEP 2: Become an operating business entity.

To do this, you must file formation documents with the state, register your business name (for tax purposes), and obtain an employer identification number (EIN). Without all three, you cannot become an operating business entity in the state of New Jersey.

During (and beyond) these first steps, you’ll find the advice of both an attorney and a CPA invaluable in getting your business off the ground. Each provides important expertise and the right professionals will work together on your behalf.

 

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The CPA and Your New Business

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Not many people spend their leisure time brushing up on the ins and outs of business tax law. Even as a business owner, you’re probably unfamiliar with your tax exposure. A CPA is your translator and is ethically bound to give you sound business advice. Don’t try to navigate the tax code on your own.

Sales Tax

States, especially New Jersey, are notorious for changing sales tax on a whim. Is your product subject to sales tax? The NJ sales tax rate has changed twice in the last two years. Certain products are sales tax-exempt as are non-profits. A CPA can help make sure your sales tax charges are correct.

Payroll

If you have employees, you’ll need to accurately reflect payroll taxes, social security, and disability on pay stubs. For a first-time business owner this can all be very overwhelming. A CPA knows how to get your pay system up and running.

Income Tax

Sound financial planning is a necessity for a new business. A CPA will help determine your tax liability and set you up with a payment plan for quarterly tax payments to help you avoid an audit. They will also help maximize your deductions. A lot has changed in the allowable deductions since the changes in the 2018 tax code, so review with your CPA what you plan to deduct.

Growth

Many small businesses require an investment from outside parties in order to grow. A CPA can help create a financial plan to make the numbers look most attractive to investors. Your goal may even be to sell your business outright, and the process of reviewing your accounting books will determine your profits.

 

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The Real Estate Attorney and Your New Business

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Location, location, location

One of the first decisions you’ll make about your business once you’ve given it a name and registered it is where you will be located. Sometimes you start out in a home office. Hopefully the business will grow to the point where you’ll need to determine an outside location. Finding the optimal space that will boost your chances of success can be a daunting task as a business owner. You’ll work with a real estate agent to help you find the right space, but your attorney will be reviewing all contracts, leases, inspections, and will look for liens on potential locations.

Room to grow

There are many factors you’ll need to consider like whether to rent or buy. What size space is best suited for your current needs but can also accommodate future growth? Locales with heavy foot traffic, access to major roadways, proximity to your client base, and low crime rates may be more expensive but will be give your business the best chance for growth. Should you decide to rent a space, your real estate attorney will assist with any issues that arise with your landlord.

Veitengruber Law can also help your business in areas outside of real estate law, such as:

Liability

A common misunderstanding among many small business owners is that by incorporating into a formal business structure (as mentioned above), you’ll be free from all personal liability. While there are instances where you can be held personally liable, they are specific, and Veitengruber Law will spell out your personal liability as a business owner so that you don’t end up getting sued. Knowing the rules is very important!

Asset protection

In addition to lawsuit risks, you can also run into contract disputes and torts (actions that result in damages) when you own a business. Protecting your business assets is key, and this is one area in which Veitengruber Law is proud to be extremely well-versed.

Debt Negotiation

As your business attorney, we will form an important relationship with you throughout the life of your company. When your business hits a bump in the road, such as taking on too much debt, Veitengruber Law will be just a phone call away to assist with difficult creditors. We can help you formulate a plan to avoid getting into too much debt in the first place, but we do recognize that debt happens.

 

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Attorney and CPA: Working Together

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It is important that your CPA and attorney work well together. Veitengruber Law can recommend several experienced and trustworthy local CPAs from our extensive professional network. Together we can create a top-to-bottom budget that will fit your business needs.

Drafting the right Attorney/CPA combination is one of the most important steps you can take as you start your small business. Although it can be tempting to “do it yourself” in order to save money, the investment of hiring experienced professionals like Veitengruber Law will give your business a much higher chance for long-term success.