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First-Time Home Buyer? Cedarcrest Realty is Here to Help
You’ve been renting an apartment or house but now you’re thinking about buying your first home in North Jersey. There are many considerations for first-time home buyers—from determining your budget to locating your target neighborhoods.
Entering the real estate market can be exciting—and for first-time buyers, a bit daunting (we promise it gets easier after your first home purchase!). It’s no secret that we live in an expensive part of the country with high real estate taxes. But don’t let that deter you from finding a great starter home in Bergen, Essex, Morris, or Passaic counties (or beyond). There are many wonderful towns and homes in all price ranges.
Let’s break it down for you.
Considerations for first-time home buyers
- Budget – determining your home-buying budget will then determine many other factors involved in your decision—size of the house, neighborhood/town, type of mortgage, and more. The sale price of any home is not the only cost consideration—there will be approximate monthly mortgage payments, real estate taxes, and utility costs. In the case of a condominium or townhouse community, common area charges and/or homeowner association (HOA) fees must be included. Your real estate agent can go over all the typical expenses involved, and help you formulate a comfortable working budget.
- Settling on a budget will lead you to the next steps in the house hunt. Knowing what you can comfortably afford will help you zero in on certain towns or areas, and the type of house in your budget. Choosing the area and type of home are highly subjective decisions and many criteria play into it. For example:
- Do you prefer urban, suburban, or more rural communities?
- Do you need bus or rail availability, or access to highways?
- Is the public school system important to you if you plan to raise children there?
- What features are must-haves vs. want-to-have in the home?
- A fixer-upper in an urban location may be right for you—if you have the funds to invest in the needed renovations or can tackle those yourself.
- Perhaps a smaller house in a desirable town is a great starter home, with room to expand or move up in later years.
- Or maybe, despite renting all those years, you’ve socked away a hefty amount for a down payment and your income supports a jumbo mortgage on a big house on a large piece of land. Go for it!
- Mortgage pre-approval – at CENTURY 21 Cedarcrest Realty, we strongly recommend (especially in the crowded North Jersey real estate market) to get pre-approved for a mortgage (not just pre-qualified). A lender’s pre-approval letter, while not a guarantee of a loan, is a commitment by the lender to a certain amount (pending appraisal). This shows you are serious about making an offer, as it is a more rigorous process than pre-qualification.
- The offer – once you find the right house, your real estate agent will help you negotiate an offer and guide you through the next steps once your offer is accepted. There are a lot of them! There will be certain disclosures to consider and items you may want repaired before the sale (or use as a bargaining tool if you agree to handle those once the sale is completed). There will be a home inspection, appraisal, title search, and mortgage approvals. Your Cedarcrest agent will also explain the closing costs associated with your transaction so you can be prepared for everything in that exciting home stretch.
Our Cedarcrest Realty associates can provide valuable information about the towns in the counties we serve, with relevant tax rate figures, the town amenities (recreation facilities, programming for residents, shopping, and dining options) and what your local real estate taxes cover (such as garbage and recycling pickup). Your agent will also provide the comparative sales analyses that will help you arrive at a competitive offer price.
About that mortgage: Having a strong credit score will help you qualify for a favorable program, so it’s important to know your credit score and take steps to improve it if necessary. Review your finances to see how you can save as much as possible (while also meeting your existing financial obligations, of course), and assess where you can cut if necessary. The traditional down payment is 20% of the purchase price but there are programs available for home buyers who have less set aside for the down payment.
Your real estate agent at CENTURY 21 Cedarcest Realty will walk you through the entire home buying process, and provide guidance at each step. Our team also has many in-office resources as well as trusted professionals in related fields such as mortgage lenders and home inspectors. The New Jersey Housing and Mortgage Finance Agency has a helpful guide with lots of information about what to expect during your first-time home search, and our specialists in North Jersey real estate are here to help. Call our Caldwell office at 973-228-1050 or in Little Falls at 973-364-1111 to get started on your home-buying journey.
On the Market for a Home? Here are Five Considerations Before You Buy.
Are you a first-time home buyer? If so, here are five issues into consideration as you engage in your house hunt. Doing so will help avoid surprises that could bog down your transaction.
Is now the right time for you to buy?
This depends somewhat on your career situation. According to the Bureau of Labor Statistics, the median tenure of workers of ages 55 to 64 is 10.1 years, while for workers ages 25 to 34, it is only 2.8 years on average. If a distant job relocation is in the foreseeable future or career advancement is likely to take you out of the area, consider remaining a renter for now. Conventional wisdom is that you need to stay in the home for at least five years in order to recoup the amount of money you spent to purchase it.
Identify your housing criteria
Do you have a “dream home” in mind? Are you willing to modify your dream? After all, no house is totally perfect. We suggest you:
- Create a list of absolute musts and reasons why—such as the town (for the school district, town services, property tax rate, environment), style and size of house, proximity to work, public transportation, etc.
- Be flexible. Cosmetic updates may be needed in an otherwise great house so don’t let those deter you. If you like a house that needs a lot of work but has great bones, ask if the selling price is negotiable enough to make a reasonable offer.
What can you afford—including closing costs?
Set yourself up for success by first developing a budget that includes how much down payment and monthly mortgage payments you can afford. Then, look at the closing fees you’ll have to cover at time of loan settlement. These are fees paid to various third parties as part of expediting and closing the transaction.
As the home buyer, you are expected to cover most of those closing costs (3-4% of the home’s price) compared to what the seller will. Included are:
- Title company closing fee for the representative who supervises the title transfer
- Title search – this ensures there are no liens on the property to prevent you from buying it
- Lender’s title insurance – protects the mortgage lender if something was overlooked in the title search
- Document recording fees (deed and mortgage)
- Loan origination fee – paperwork processing
- Home appraisal
- Home inspection
- Survey fee (single-family homes, townhomes)
- Escrow deposit – usually covers two months of prepaid property taxes and mortgage insurance payments
- Taxes on money you borrowed for your home loan
- Discount/mortgage points – paid to your lender in exchange for a lower interest rate, which has great long-term value
- PMI, or private mortgage insurance, if you put down less than 20 percent of the purchase price
- Other fees include running your credit report, underwriting and assessing your creditworthiness, wire/courier fees, attorney fees, and real estate agent commission
Federal law mandates that mortgage lenders provide borrowers with a loan estimate form in advance of the closing, denoting all the approximate closing costs. You may opt to roll the closing costs into the mortgage, but you’ll be paying interest on that amount for the life of the loan.
NOTE: If buying a condominium, get as much information as you can about the homeowners association fees/common area charges, the regulations regarding home improvements in your unit, and the association’s track record on maintenance and repairs.
Check your credit report
As noted above, the lender will be doing so and so should you. Contact Equifax, Experian and/or TransUnion for your free annual report. You want your credit score (FICO score) to be high enough to qualify you for a favorable rate. Clean up any outdated or incorrect information you find on the report right away. Scores in the 750-850 range are considered excellent, 700-749 is good. Anything below 650 is considered poor, making you a credit risk in lenders’ eyes.
Work with CENTURY 21 Cedarcrest Realty
Searching for a home—whether as a first-time buyer or a seasoned residential real estate owner—is exciting but with all the details, it can be bit daunting and time-consuming. At CENTURY 21 Cedarcrest, our real estate professionals are dedicated to producing the best outcomes for every customer. When you work with our team, you’ll be with people who work tirelessly to help you navigate your real estate experience—with enthusiasm, confidence, and a passion for superior service—all backed by the industry-leading CENTURY 21® system and tools.
Contact us to get started on your journey to home ownership, or to find your next great home. We’re specialists in Essex County and Passaic County, NJ, and represent buyers and sellers from municipalities throughout North Jersey.
Working with Millennial First-Time Home Buyers
With most first-time home buyers falling within the millennial age range (those born between 1981 and 1996, ages 23 to 38 this year), real estate professionals might be interested in findings revealed in a recent Chase Home Lending survey. The survey was done among 1000 millennials about home ownership.
It turns out that they making smart financial decisions and saving money to make home ownership a reality. In fact, responses point to millennials being hyper-focused on the home buying journey. More than two-thirds of respondents said they want to talk about the process and about real estate topics, such as affordability and neighborhoods, with their friends.
Some other key findings include:
- Seventy percent say they are willing to cut back on weekend activities in order to buy a home within the next 12 months – they are curtailing their shopping, dining out, movie-going and spa visits among their expense reduction tactics
- Women are slightly more open to this idea than men
- Fifty-two percent of first-time home buyers feel financially ready now
- Many are optimistic about the home buying process
- Seventy-one percent of women are willing to discuss real estate topics with friends while over 50 percent of men are comfortable talking about these on social media
Our takeaways at Century 21 Cedarcrest
1 – Real estate agents who provide an excellent transaction process with millennial homebuyers are likely to receive more referrals. After all, if these buyers are talking to their peers about the home buying journey, they are more likely to refer those agents with whom they are having a positive experience. This group values peer opinions; make sure you’re part of that.
2 – Members of this demographic are serious about positioning themselves for home ownership; and they want to learn more about becoming home owners. Whatever information or guidance you can provide will be a positive part of the transaction and help position you, as their real estate agent, as a trusted resource worth their referrals.
3 – If improving their credit score is an issue they are working on, or if they want to better understand home mortgages, look at your network to see who you can refer to help these home buyers make their dream of ownership a reality.
4 – With more than half of millennial first-time home buyers stating they feel financially ready to purchase a home, help them keep up the anticipation and excitement with relentlessly excellent service.
At Century 21 Cedarcrest Realty, we pride ourselves on making the process as smooth as possible for first-time home buyers. We understand you’ll have lots of questions and our team has the answers—and the listings that meet your criteria, from neighborhoods to school systems to town services and more. Whether it’s a condominium, townhouse, or single-family home, contact Century 21 Cedarcrest about what you’re looking for.
7 Simple Secrets for First-Time Home Buyers
7 Simple Secrets for First-Time Home Buyers
Psst! Hey, you! Buying your first house? We know a few things we think you should know. Things that will ensure you end up in a house you can afford in a neighborhood you love – without having to shell out a ton of money later on to make avoidable repairs. Ready? Here we go…
Counseling is Available – for Free
There are a lot of non-profit organizations who provide housing counselors. Talk to one. These individuals can help you to assess your finances, life situation, and other considerations and help you determine if it’s really the right time for you to buy.
You Need to Understand Your Lifestyle
We’d like nothing better than to sell you the house of your dreams, but the realist inside knows that not everyone has a lifestyle that makes homeownership feasible. Take a close look at your field of work, the current economy, and recent trends. Does buying a home make financial sense?
Assess Your Finances
A lot of people look at homes before looking at their finances and this is a HUGE mistake. You need to consider your credit history, capital for a down payment, capacity to pay your bills, and the collateral (condition of the house you want to buy). There are a lot of online estimators you can use to assess your finances. Try one.
Have a Bottom Line
Walk into every situation using your head, not your heart. You may be in love with a home, but if the seller won’t budge on the price, you have to know when to walk away. Just because you’re approved for a certain mortgage amount doesn’t mean you should buy a house for that same high price.
Shopping for Necessities
A lot of people look at the home but forget about the rest. Make sure you consider the amount of money you’ll need to spend on renovations. Oh, and appliances – the fridge, washer, dryer, and oven are important. If this is truly your first home, you’ll need furniture, too. Shop around and consider the prices as you calculate the total you’ll really need.
You’re Allowed to Make a Low Offer
That house you’re interested in has been sitting empty for a very, very long time. No one seems particularly interested and it’s still there despite you spending weeks looking at other homes. You want to make an offer, but you want to make a low offer. Do it. The worst that can happen is that the seller says no. And you never know; he might just say yes.
Have a Home Inspection
You’ve made your choice. Great! Now make sure you get a professional home inspection. Your offer should be contingent upon the results of the home inspection so that you can back out if the inspector finds something wrong with the home that can’t be handled reasonably. Make sure your offer includes this condition. It’s important.
Your real estate agent is here to help, no matter what. Give us a call and we’ll walk you through the process from start to finish. We can’t wait to see you settle into your first home!
First-Time Homebuyers: Will there be Enough?
It’s no secret that the housing market has been slow to recover, but there has been one group of homeowners that continue to strengthen the market little by little: first-time homebuyers. If you were a first time-buyer within the last couple of years or are looking to make your first purchase, you know the type of market that’s out there. Low interest rates and low housing prices make investing in a home an excellent choice.
What many people don’t know is that being a first-time homebuyer is challenging because there is very little inventory as more people are holding onto their properties and riding out the market. And, loans aren’t as easy to get as they once were, and incentives are dwindling down. For instance, starting June 1, 2013, anyone who takes out an FHA loan and doesn’t have at least 10 percent down will pay mortgage insurance for the life of the loan.
As home prices go up, interest rates go up and housing inventory stays low, first-time homebuyers – the key to a healthy residential real estate market – are still taking it slow. It’s hard to jump on something just because the price is right when the home or the location is not. Perhaps this is why first time buyers make up only 29 percent of recent buyers, according to the National Association of Realtors. Generally, these first time buyers make up about 40 percent of the market.
There are other factors that are making it hard for young adults to enter the housing market. Some are unemployed or underemployed and others don’t have a sufficient down payment. Others have poor credit or are burdened with student loans, with not enough money to handle a mortgage payment. These factors affect the young most of all, and it has some worried that there may not be enough first time buyers to sustain the market.
Only time will tell, as some believe that there are many buyers out there that are “on the fence,” waiting out the market to see what happens. If a young couple finds their dream home and has to pay a bit more in interest, it’s worth the wait.
