We receive quite a few questions about interest-only mortgage loans in New Jersey, and in particular jumbo mortgage loans with an interest-only payment structure. So we thought it would be helpful to publish and explain this topic. Here’s what you should know about interest-only jumbo mortgage loans in New Jersey.
Interest-Only Jumbo Loans: How it All Works
Interest-only home loans can be either conforming or jumbo. These terms relate to the size of the mortgage in relation to pre-established limits or “caps.” This will all make more sense if we cover some basic terminology.
Interest-only mortgage: As the name suggests, an interest-only mortgage loan is one where the borrower pays only interest for a specific period of time. During this time, the principal balance remains the same. While these products can vary in their structure, most have an interest-only period lasting from five to ten years. After that, the borrower would begin to make payments toward the principal as well as the interest. So the monthly payments would increase in size.
Jumbo mortgage loan: A jumbo or “non-conforming” home loan is one that exceeds the conforming limits set by the Federal Housing Finance Agency. A conforming loan is one that adheres to these limits and can therefore be sold to Fannie Mae and Freddie Mac. A jumbo loan exceeds these limits and generally cannot be sold to Fannie or ...
When shopping for a mortgage loan in New Jersey, you have a lot of options. The key is to make an informed decision — and we can help! This is the first in a two-part series that explains the different types of mortgage loans in New Jersey. It examines the key differences between fixed and adjustable-rate loans.
Types of Mortgage Loans in New Jersey
One of your primary choices has to do with the rate structure on your loan. You can choose to have a fixed-rate mortgage with an interest rate that remains the same over time, or an adjustable-rate mortgage that can change or “reset” over time. Its important to select a mortgage program that meets your financial goals and objectives. Here are the key differences between a fixed and adjustable:
Fixed-Rate Loans Offer Long-Term Predictability
A fixed-rate mortgage loan (FRM) has an interest rate that stays the same for the entire repayment term. The rate you receive when you first take out the loan is the rate you will keep for as long as you hold onto it.
Payment stability and predictability are the primary advantages with this type of New Jersey mortgage loan.
Fixed-rate loans come with different term lengths, with 15 and 30-year being the most popular. The 30-year fixed mortgage, in particular, is the most popular financing option among home buyers in New Jersey and nationwide. Many borrowers prefer this option because it offers a degree of certainty, and it reduces the monthly payments by spreading them out over a ...
Are you thinking of buying your first home in New Jersey in 2018? If so, keep reading. Below, we have rounded up the latest mortgage industry and housing market news that’s relevant to home buyers.
5 Things to Know When Buying a First Home in New Jersey
Home prices across the state are still rising, and additional gains are expected in 2018. Interest rates might trend upward over the coming months as well. Inventory remains tight in some NJ housing markets. These are just a few of the trends you should know, when buying your first home in New Jersey in 2018.
1. Home prices are still rising, and will likely continue in 2018.
On average, house values across the state of New Jersey have risen steadily over the last couple of years. And the latest round of predictions from economists suggest they will continue to rise into 2018 as well. This is the first thing you should know about buying a home in New Jersey in 2018.
According to the real estate information company Zillow, the median house value for NJ reached $308,300 in October 2017. That was a 5% increase over the same month a year earlier. Looking forward, the company’s economists expect prices to continue rising through the end of 2017 and into 2018 (though they could slow down a bit).
2. Housing market inventory declined during 2017.
While housing markets across New Jersey are not as tight as they are in places like California and the Pacific ...
Closing costs are a big concern for New Jersey home buyers, because they represent an out-of-pocket expense that typically must be paid up front. There’s also a lot of confusion surrounding this topic. With that in mind, here are five things you should know about home buyer closing costs in New Jersey.
1. Typical closing costs and pre-paid expenses for NJ home buyers are 2% to 3% of the purchase price.
The finalized amount of closing costs a buyer pays in New Jersey can vary, due to a number of factors. Generally speaking, a more expensive home will result in higher costs. But that’s just one variable that can affect the amount you pay to close on your home.
As of 2017, home buyer closing costs in New Jersey tend to average somewhere between 2% to 3% of the purchase price. But they can fall outside of this range as well, in some cases.
New Jersey home buyers who buy a home for $400,000 with a 20% down payment pay approximatley $6,700 in closing costs (not including pre paid expenses). Prepaids are not a fee, but are costs associated with the home that are paid in advance when closing on a loan. These include Property Taxes, Homeowner’s Insurance, and Mortgage Interest that will accrue between the closing date and month-end. Property Taxes and Homeowner’s Insurance are collected to put into your Escrow Account so that you have enough reserves to pay these bills then they are due.But again, ...
Below, we’ve gathered some information about the real estate market in Bergen County, and added some helpful tips for home buyers. It’s must-read material for anyone planning to buy a home in Bergen County, New Jersey in 2017 or 2018.
Bergen County Real Estate Market Update
Home prices across the county have risen steadily over the last couple of years. And they’re expected to continue rising (to some degree) into 2018. That’s the first thing you should know about buying a home in Bergen County. If you postpone your purchase, you might encounter higher housing costs due to ongoing appreciation.
Granted, you should never make a home purchase until you’re absolutely ready. Just understand that house values in the county are expected to continue moving north over the coming months.
According to the real estate information company Zillow, the median home value for Bergen County rose to $456,100 as of October 2017. That was an increase of 4% from a year earlier. Looking forward, they are predicting additional but smaller gains for the next 12 months (ending in October 2018).
Here are some relevant statistics from the New Jersey REALTORS®:
Single-family detached homes: The median sales price rose from $490,000 in August 2016 to $507,000 in August 2017, according to the state’s Realtor association. The supply of homes dropped to five months this August, a 25% decrease from the same ...