How much house can I afford to buy in New Jersey, when using a mortgage loan?
This is one of the most common questions among home buyers in the state. Here are some things to keep in mind when establishing a budget and shopping for a home in New Jersey.
How Much House Can You Afford in New Jersey?
There are several factors to consider when deciding how much house you can afford to buy. For most buyers, mortgage financing plays an important role here. So the size of the loan you qualify for can obviously influence how much house you can buy. And that brings up the debt-to-income ratio.
Banks and mortgage companies use something known as the debt-to-income ratio, or DTI, as one of the factors in determining how much a person can borrow. So this ratio can affect your buying power as well.
Many financial advisors recommend that a person’s total debt payments (including the mortgage loan and all other recurring debts) should be no higher than 36% of gross income. But this is just a general rule doesn’t apply to all situations. Some people are capable of managing a higher level of debt.
That’s why most mortgage programs available in New Jersey today set the bar somewhere around 43%, for the total debt-to-income ratio — or even 50% in some cases.
Loan Limits Play a Role As Well
Your borrowing capacity could also be affected by the maximum size limits for the mortgage program you ...
This is the second in a two-part tutorial that explains the different types of mortgage loans in New Jersey. Last time, we looked at the differences between fixed and adjustable-rate mortgages. This article explains the key differences between FHA and conventional home loans in New Jersey.
The primary difference between conventional and FHA loans has to do with insurance backing:
- FHA loans are insured by the government, through the Federal Housing Administration. This insurance protects mortgage lenders from losses resulting from borrower default. But the government backing benefits borrowers as well, as we will discuss in a moment.
- Conventional loans are originated (and sometimes insured) solely within the private sector. Unlike FHA loans, the government does not insure or guarantee these mortgage products against losses. So you can think of a New Jersey conventional loan as a “non-government-backed” mortgage option.
Advantages of FHA Home Loans in New Jersey
The FHA loan program is managed by the Department of Housing and Urban Development (HUD). According to current HUD guidelines, borrowers who use this mortgage program can make a down payment as low as 3.5% of the purchase price or the appraised value.
This is one of the primary advantages to using an FHA loan when buying a house in New Jersey. It allows you to make a relatively low down payment / ...
For a lot of New Jersey home buyers, the down payment can be the biggest hurdle to buying a home. But it might only be a perceived hurdle. The truth is there are several mortgage programs available in New Jersey that offer low down-payment requirements.
Additionally, borrowers might be able to obtain gift money from a family member or borrower from a 401k. Those are just some of the ways you could buy a home in New Jersey with little to no money down.
Buying a Home With Little Money Down, Using FHA
House prices across New Jersey have risen steadily over the last few years. According to the real estate information service Zillow, the median home value for the state rose 5% over the last 12 months alone (ending in October 2017).
As a result, many home buyers in New Jersey are seeking ways to reduce their upfront, out-of-pocket expenses when buying a house. Some prefer to buy a house in New Jersey with little to no money down. Here’s how you might accomplish that goal.
Despite common misconceptions, you don’t necessarily need a down payment of 20% or more when buying a house in New Jersey. There are mortgage loans available that offer a much lower upfront investment.
The FHA loan program is one of those financing strategies that offers a low down payment. The Department of Housing and Urban Development (HUD), which manages this particular mortgage program, allows borrowers to make a down payment as low as ...
Visit NJ Lenders Corp. at booth #825 to vote for your favorite ‘retro’ candy and enter for a chance to win a $500 Amex gift card!
NJ Lenders Corp. is excited to announce our participation at the 2017 Realtors Triple Play Convention in Atlantic City, NJ December 5th & 6th. The Triple Play convention has helped bring Mortgage Brokers and Realtors together in an unmatched networking event.
As a premier year exhibitor, NJ Lenders Corp. will showcase our diverse and comprehensive capabilities that allows us to be one of NJ’s largest Retail Mortgage Bankers. But don’t let our name fool you! We are licensed in 7 states including New York, New Jersey, Pennsylvania, Connecticut, Virginia, Maryland, and Florida. Our mission is to produce competitive mortgage rates and fees while providing a level of service that exceeds expectations. With 26 years of experience, we are proud to serve over 60,000 homeowners.
The tax plan created by some members of Congress, and endorsed by the president, could change the way mortgage interest deductions work in New Jersey and across the nation. Here’s an update on the current rules for mortgage interest deductions in New Jersey, and the proposals that could potentially alter them in 2018.
Mortgage Interest Deductions in New Jersey: A Popular Tax Break
Mortgage interest deductions are a hot topic among home buyers and homeowners in New Jersey, and it’s easy to understand why. The average homeowner could save thousands of dollars per year by using a mortgage interest deduction. Nationally, they add up to approximately $70 billion per year, according to recent reports.
They are essentially a form of subsidy, through which homeowners can file a tax deduction for the interest they pay on their home mortgage loans.
Under the current tax law, homeowners in New Jersey and nationwide are allowed to claim a deduction for mortgage interest paid. These deductions can be applied to a principal residence as well as one additional residence. They are typically capped at $1 million for the first mortgage, and $100,000 on a second mortgage.
Change Could Reduce Number of Homeowners Who Benefit
The tax reform package supported by President Trump could change how mortgage interest deductions work in New Jersey, which is why some groups are opposing the change.
The Republican-sponsored bill would essentially cut ...