Is Your Financial House in Order?
Get Your Finances Ready to Buy a Home
“Now’s the time to buy real estate!” This enthusiastic headline appears time and again but landing your dream house can be problematic if you don’t have the right financing. How you will fund your home purchase is vital to ensure you make a financially sound real estate decision.
The Christian Di Stasio Group provides a full-service approach to real estate. We work with buyers across all price points in Northern New Jersey. Armed with comprehensive insight into the local marketplace, our aim is to serve as an invaluable asset in providing expertise related to home buying while offering each client tailor-made solutions to increase your confidence in the process. Ready to buy real estate? Here’s everything you need to know!
The majority of buyers need a mortgage and will finance their purchase, using a loan to cover the cost. Yet high mortgage interest rates have some buyers exploring alternative ways of buying a home that doesn’t require a loan. When you pay for a house using cash, you’re putting a large portion of your money into an asset that is fairly illiquid, meaning you can’t tap into that money quickly. Cash buyers also miss out on mortgage tax deductions and still have to pay out of pocket expenses, such as property taxes, homeowners insurance, utilities and maintenance costs.
Setting a realistic budget and crunching the numbers is an important step toward being financially prepared to own a home. It gives you insight into your financial health to help you make an informed decision. Your home buying budget should probably include the following:
- Down payment
- Interest rate
- Mortgage payments
- Mortgage insurance
- Homeowners insurance
- Property taxes
- Closing costs
- Maintenance & Repairs
- Utilities
- Unexpected costs
As you consider what loan programs or assistance you might qualify for, be sure to research the latest New Jersey mortgage rates and compare loan options from a variety of mortgage lenders. It is preferable to get in touch with a third-party advisor, especially if you’re not sure which type of mortgage is best for your financial situation.
The vast majority of mortgages are either conventional loans (not part of a specific government program) or government-insured loans, such as FHA Loans, VA Loans and USDA Loans. Through the New Jersey Housing and Mortgage Finance Agency (NJHMFA), first-time home buyers can get competitive terms on a 30-year, fixed-rate mortgage backed by the government. The NJHMFA also assists NJ police officers, firefighters and members of the Police and Firemen’s Retirement System.
Buyers should also consider the type of interest rate a mortgage carries. The majority of mortgages are fixed-rate, which means your interest rate, monthly principal and interest payment stay the same throughout the length of the loan. An adjustable-rate mortgage has an interest rate that can change over time, making them riskier if you plan on living in your home long-term.
While both a mortgage broker and mortgage banker can offer you a home loan, a mortgage broker works with different lenders, which can help when you’re looking for different options and lower rates. A mortgage banker works for a financial institution that makes loans directly to you and banks may offer special rates to pre-existing bank “customers.”
Lenders are likely to consider these important items when deciding whether and what size mortgage you may qualify for:
- ● FICO credit scores and credit history. If your finances aren’t in tip-top shape, start working to improve them. The lender will pull your credit reports and scores to determine how risky it would be to lend you money and how likely you are to repay the mortgage debt. Raising your score can help you access competitive financing options.
- ● Down payment amount. Save up for a down payment. Lenders offer loans with down payments anywhere between 3% to 20% or more. Increasing the size of the down payment can lower the amount of money you need to borrow and lenders like to see larger down payments because they indicate a lower level of risk if you default on the loan.
- ● Home buying expenses. This could include mortgage application fee, appraisal fee, title insurance, mortgage insurance fees, home inspection costs, legal fees, homeowners insurance, property taxes and survey fees.
- ● Income and employment history. Stay away from sudden or large financial shifts when looking to get financing to buy a house. Avoid changing jobs or becoming self-employed.
The Christian Di Stasio Group uses our nearly three decades of experience to successfully guide home buyers in Westwood NJ Real Estate and greater New Jersey. Proudly ranking as a top 1% Realtor with Prominent Properties Sotheby’s International Realty, we are uniquely qualified to serve clients as Westwood NJ Realtors, Bergen County NJ Realtors, Paramus NJ Realtors and Franklin Lakes NJ Realtors. Give yourself every advantage when buying a home. We look forward to serving you as a go-to resource for all your home buying needs.
