Friday, September 29, 2023 / by Ryan De La Uz
Find Out If You’re Ready to Buy a Home in NJ By Answering these 3 Questions
So you want to buy a home. There are so many great reasons to do so: financial investment, a sense of security and so many others. But there are tradeoffs as well. You enjoy greater control, but along with it come several responsibilities and expenses.
Before moving ahead on the home buying process, answer the following questions, and you’d know if you should buy a home in New Jersey or not.
Am I ready for a mortgage?
If you are already struggling with your finances, buying a home will only add to your worries. How do you manage your bills and do you have any savings? You should have some cash in hand for the down payment, and obviously, the more you have, the better it would be. A bigger down payment allows you to avail a lower mortgage rate. You may also have to pay upfront for the home inspection fee, and other similar charges that arise when you buy a home in New Jersey.
Mortgage payments are another expense, but these are spread over the entire loan term, and you pay a certain amount every month. What if the down payment is less than 20%? Add private mortgage insurance (PMI) costs to your monthly spending.
Am I ready to stay in the same house for the next few years?
Any plans to switch your job or any plans to relocate? Wait a while before you a buy a home in New Jersey. Ideally homeownership isn’t for you if you don’t plan to stay in the same place for at least the next 7 years. The transaction costs associated with buying a home in New Jersey are significant, and it’s not until 7 years that you earn a return on them. Is that too long for you? You should be able to stay in the house for 5 years at minimum.
Home buying involves expenses such as the cost of loan security, closing costs, moving charges and miscellaneous items like new curtains and other home décor projects. Should you think about selling the house, around 6% of the sales price are for the realtor fees. Considering the rate at which homes appreciate in New Jersey, it would not be until 5 years before you can break even.
How much can you afford?
If you answered positively for the first two questions, you may be in a position to buy a home in New Jersey. Home prices are spread over a vast range; what’s the maximum that you can afford upfront and over the long run? Talk to your realtor, and they would suggest an affordable range after evaluating your financial situation.
Want to check out affordable homes in New Jersey? Ryan De La Uz is an experienced realtor in the area. Visit our website for more information and check out our mortgage calculator.