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.

Yes, You Can Get a Mortgage after Bankruptcy: Here’s How

Perhaps you think that you cannot get a mortgage after a bankruptcy but that’s not entirely true. It is still possible to get a mortgage after bankruptcy but it’s important to know what to do and how to do it properly. For example, you should first wait at least 24 months after your bankruptcy is discharged before you apply for a mortgage. You might be able to get approved for one before then but the interest rates will not be favorable to you.

So here are some tips to getting a mortgage after bankruptcy:

  1. First, you should review your credit report. The bankruptcy is going to show up and affect your score in a big way but it might not be as bad as you think. You should pull your credit report and track it regularly so you can see if there are any other things there that don’t belong and also that there are no creditors continuing to report the debts that you have covered in your bankruptcy. You need to report any mistakes or discrepancies so your report is always accurate.
  2. Always pay your bills on time. While this is just something that you should do anyway, paying on time shows that you are responsible with your finances and it helps show credit worthiness when you do attempt to apply for a mortgage.
  3. Your bankruptcy must be discharged before you apply for a mortgage. If you are still in credit counseling or a program that takes care of your finances for you, a lender will not be interested in speaking with you. So once you are properly discharged after the bankruptcy, you can begin looking at your options.
  4. Use secured credit cards. A secured credit card is a good way to rebuild your credit after a bankruptcy. It allows you to use your own secured funds to get a credit card that will then count toward your credit rating when you use it safely. You should not apply for too much credit at one time and you should only use a portion of your credit. Don’t max out your cards – even secured cards.
  5. Wait 2 years. Again, waiting two years after your bankruptcy can help you get a better rate with interest rates that are more favorable to you. You will save in the long run and it will be worth the wait.

Now that you have this information about getting a mortgage after bankruptcy, you’re ready to begin the home buying process. Talk to your real estate agent if you need a referral to a lender or if you need help narrowing down your options.