We all know that buying a house, whether for the first time or the tenth time, is a BIG financial step. Still, it’s usually a far more complex process than most first-time buyers realize. You have to figure out, for example, how much house you can afford, how many beds and baths you need/want, what kind of neighborhood will suit you, what kind of financing is best for you, and so much more. In short, there are a lot of tasks to tick off the list when you’re buying a house. So let’s take a look at the 10 most important things you need to do when buying a house in New Jersey.
1. Research . . . Thoroughly
A lot of home buyers skimp on this step, but you really need to do first things first when buying a house in New Jersey. And it all starts with research – very early on in the process.
Heres what industry pros recommend: “As soon as you can, start reading Websites, newspapers, and magazines that have real estate listings. Make a note of particular homes you are interested in and see how long they stay on the market. Also, note any changes in asking prices. This will give you a sense of the housing trends in specific areas.”
2. Determine What You Can REALLY Afford
Many people buying a house in New Jersey look at only the monthly mortgage payment in trying to determine affordability. But there’s a lot more to it than that.
You also need to factor in all the one-time purchase-related costs, as well as the many recurring expenses. These include down payment, loan-processing fees, closing costs, homeowners insurance, private mortgage insurance, property taxes, maintenance and repair, and so on. “Lenders,” the experts say, “generally recommend that people look for homes that cost no more than three to five times their annual household income if the home buyers plan to make a 20% down payment and have a moderate amount of other debt.”
3. Get Pre-approved
Before you ever begin looking for a home, you need to know exactly how much financing you can get. Getting pre-approved will let you know that. You provide your lender with all your financial information, and the lender will determine how much they will lend you. You will also get from the lender a pre-approval letter stating what you can borrow.
Getting-approved will save you tons of time because you will know exactly what you can afford and so can limit your house hunting to homes within your price range. In addition, if you’ve been pre-approved, sellers will see you as a serious buyer, and this will give you more negotiating leverage.
4. Start Shopping and Then Make an Offer
Here is where the process of buying a house in New Jersey really begins – the actual shopping after you’ve completed the first three steps. There are several things you should carefully examine and consider in each house you view as a possibility. These include:
- Electrical system
- HVAC system
- Appearance of nearby houses
- Neighborhood traffic
- Nearby amenities
- School system
Then, once you’ve found a house that meets your requirements, it’s time to make an offer. Industry pros recommend working “with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process.”
The real takeaway here is that you should lean on your agent’s expertise when it comes to making an offer. To discover more about this, call (855) 932-8987.
5. Choose Your Loan Type
Now you will get down to the financial nitty-gritty. You’ve been pre-approved and you’ve found a house you want to buy, so it’s time to choose the kind of mortgage loan that best fits your financial situation and goals.
Depending on whether you want fixed monthly mortgage payments or payments that start out low and increase over time, you need to decide between a fixed-rate mortgage and an adjustable-rate mortgage. In addition, you have (typically) the choice of a 30-year loan or a 15-year loan. It all depends on your unique situation and your long-term housing and financial goals.
6. Get an Inspection
Next in the process of buying a house in New Jersey is finding out whether the house has any problems. This is what the inspection is designed to do, as well as protecting you.
“Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.”
7. Have an Appraisal Done
Your lender will, of course, need to make sure the house is actually worth at least as much as they are lending you to purchase it. So, typically, your lender will arrange for a third-party appraiser to visit the home and conduct a professional appraisal to provide a fairly accurate valuation of the house. This lets everyone know that you are paying a fair price.
8. Assemble Your Documents
Buying a house in New Jersey involves a mountain of paperwork, including many documents you’ll have to provide. So it’s best to start getting it all together well before the closing date. The good news here is that “[y]our lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying.”
The final step in buying a house in New Jersey is, of course, closing – the point at which the transaction is finalized. Here’s how it typically proceeds:
“At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. It typically takes a couple of days for your loan to be funded after the paperwork is returned to the lender. Once the check is delivered to the seller, you are ready to move into your new home!”
10. Hire a Local Agent
This may be the most important thing you need to do in buying a house in New Jersey and probably the first thing you should do. That’s why we’ve saved it for last in the place of prominence. A qualified local real estate agent will be your partner through all of this, helping you navigate the process successfully and get the best deal possible. Your agent will possess knowledge of local markets, negotiating skills, and experience with the process – all of which make a good agent nearly indispensable.