First Time Home Buyers New Jersey

12 Steps to Guide First Time Home Buyers in New Jersey

First Time Home Buyer New Jersey

A step-by-step process to guide you through your home buying journey in New Jersey, the Garden State

Before anything else, congratulations! The fact that you’re reading this article means that you are on your way to finding and eventually owning a new home. We know that you seek to find all, if not most of the answers to your questions as a first time home buyer in New Jersey. And that is why we are here. So that first time home buyers like you will have a wonderful home buying experience and that the process will hopefully go smoothly for you.

Buying a new home is no simple task especially for first time home buyers in New Jersey, or in any state for that matter. But this we can tell you. Once you read through this article and you’ve familiarized yourself with all the protocols, documents, and procedures in home buying, then all will make sense.

Moreover, we’ll help you learn more about the financial programs in New Jersey, such as the mortgage and assistance programs. Consequently, you’ll have a better understanding, as well as appreciation for the whole process. Then you’ll know, if indeed, it is the right time for you to buy. After all, buying a home truly is a major life decision.

Where to start?

When you have made up your mind that it is time to buy a house versus to continue on renting, then that is already a big step. And once you have established that mindset, what should you do first? Here are a few steps that can help first time home buyers in New Jersey get started on the home buying journey.

  1. Set your mind on a budget and determine what you can comfortably afford
  2. Know your credit score
  3. Get a pre-approval letter for your mortgage
  4. Look for a reliable team (realtor, lawyer, inspector)
  5. Prepare your timeline and decide when you want to move in
  6. Search for your dream home in New Jersey  
  7. Submit your offer and work on contract negotiations
  8. Undergo attorney review during the contract phase  
  9. Final inspection and other negotiations
  10. Sign your mortgage
  11. Hire a home insurance
  12. Closing time

1. Budget-setting

You might think that it is fairly easy to figure out a budget based on your current income. But first time home buyers in New Jersey have to consider this – the Garden State is noted to be a really expensive state to live in. Not only that, it has some of the highest taxes in America. New Jersey also has two of the wealthiest counties in the U.S. namely Hunterdon County and Somerset County. We’re not saying these facts to intimidate you but for you to take it into account. This state really has a lot to offer and is a good location for a home. Apart from its proximity to New York, New Jersey has a strong economy and boasts of really good schools in the Northeast area.

Just so you know, first time home buyers in New Jersey must expect some pricey homes in most of its counties. In New Jersy, the median home value is around $360,084. In Jersey City, the median home value is higher at $448,778 and even much higher in Montclair, at $803,973. You can check out this New Jersey mortgage calculator to help you figure out your budget and monthly payments when you apply for a mortgage for your home.

2. Knowing your Credit Score

Knowing your Fico score or credit score will help you a lot in the process. Being familiar with your credit score and keeping it high gives you an advantage when choosing among certain loan options. Credit scores range from 300 – 850. It is important to note that first time home buyers in New Jersey need to have a credit score of 620 or higher to quality for certain mortgage programs. If you’re interested to know more about credit scores, check out our other article on How much house can i afford.

3. Securing Pre-approval on Mortgage

Checking out financing options and securing approval on your mortgage early on will help reduce your worries. We want to get this time-consuming, but essential step out of the way as soon as possible. Also, doing it early in the process gives you the advantage of being a qualified buyer when you bargain for the terms and the price of your target property.

Lucky for you, there is the New Jersey Housing and Mortgage Finance Agency (NJHMFA), which is an organization that works to help families and first time home buyers in New Jersey become capable of owning good quality and affordable homes.

First-Time Home buyer Mortgage Program

First time home buyers in New Jersey may avail of a competitive 30-year, fixed-rate, government-insured loan provided by the New Jersey Housing and Mortgage Finance Agency (NJHMFA). To qualify for the program, you need to:

  • Be a first time home buyer. This means that you have not owned a home in the past 3 years.
  • Must have a credit score of 620 or higher
  • Planning to buy a home in any of the New Jersey counties
  • Your income and purchase price of the home are within the prescribed income and purchase price limits

Below are the Purchase Price and Income Limits within the New Jersey Statewide Area. The area of purchase and size of family determine the income limits. This should not exceed 140% of Area Median Income.  

Here are the Purchase Price and Income Limits in the Urban Target Area. Higher income limits are awarded to properties that are in the Urban Target Area (UTA).

Down Payment and Closing Cost Assistance

The New Jersey Housing and Mortgage Finance Agency recognizes the difficulties that first time home buyers in New Jersey go through. So, they came up with yet another form of financial assistance program. This is what they call the NJHMFA Down Payment Assistance Program and it provides the following to qualified buyers:

  • $10,000 interest-free loan
  • It’s a second loan that has no monthly payment
  • May be used as down payment or closing costs
  • Can be combined with the First-Time Homebuyer Mortgage Program

The NJHMFA also provides a list of their Participating Lenders.

NJHMFA Police and Firemen’s Retirement System loan

First time home buyers in New Jersey who are active members of the New Jersey and Firemen’s Retirement System (PFRS) may also get a 30-year fixed interest rate loan from the NJHMFA. This can be used by first time home buyers to purchase a property or refinance an existing home. To qualify for the program, you have to:

  • Have at least one year of creditable service
  • Price of home is below $453,100

4. Need for a reliable Team

We understand that as a first time home buyer in New Jersey, it would be great to get all the help you can get. You need a good team who can be there for you, to answer all your questions and give you proper advice.

More importantly, you need a Realtor who can be trusted and one whom you know has your best interests in mind. After all, New Jersey homes come at a high price and you wouldn’t want to be working with someone who might end up costing you more money.

Here are a few things you might want to consider in choosing your Realtor:

  • Has ample experience in the real estate industry. It would be good if the person has at least 5 years of experience dealing with buyers, sellers, lawyers and other agents. He or she should be able to explain to you clearly all in the ins and outs of the home buying process in New Jersey.
  • Must be really knowledgeable on the area. Your real estate agent should be very familiar with the neighborhood where you want to buy your property. It would be good if he or she knows what’s around, like hospitals, schools, groceries, other establishments, and has a good feel of the community.
  • You want someone who understands your needs, can guide you properly through the buying process and most of all, someone who can represent you well. You can assess  someone’s personality by how they deal with you in meetings and with the amount of patience they have when it comes to your unending queries.
  • Vast knowledge in the business is a major plus and you want to ensure that your Realtor is keeping up with the times and is continuously keeping himself / herself updated with all the personal, legal, environmental, and other issues related to real estate.
  • Must abide by the National Association of Realtors Code of Ethics to ensure that your Realtor treats you and others fairly. This also serves as a guide in dealing with people in the industry.

5. Set your timetable and your target moving-in date

Setting a timetable helps make the process more organized and helps you reach your goal of owning a New Jersey home in your desired date. Depending on the area, most people find a home in around 6-8 weeks. The average time it takes from locating a property in New Jersey to closing is 2 months or 60 days. Other times, you can close a deal as fast as 30 days. But do not easily be discouraged as other deals take around 90 days to close.   

6. Searching for your New Jersey dream home

So here you are and you have decided to buy a home in the Garden State. It’s a really nice place to live in and a wonderful advantage is the easy commute to New York City, if you happen to work in Manhattan. Searching for your new home is the most exciting part of the process. Just trust your taste and your instincts when deciding on what to buy. More importantly, do not get ahead of your planned budget, so that you can still go out (or stay at home) to party when all has been finalized. Just a few suggestions to help in your search for your dream home:

  • Have a list of things/requirements for your new home. What do you need and want in a new home? Needs are the non-negotiables. These are the basics depending on the size of your family, the place and nature of your work, or the kind of family gatherings that you have.You might have the need for at least 3 bedrooms, a spacious open kitchen, or an outdoor barbeque area. The wants may include a pool or a game room, but things that you can compromise on.
  • Seek referrals and ask around. A friend or family member might just know of a property that suits you and your needs.
  • Do your own research. There are various websites that have home listings in the New Jersey area.
  • Ocular inspection. Visit the areas which you really love in New Jersey. Check out the nearby establishments, shops, restaurants, and schools. Talk to the people there so you’ll get a feel of the community.
  • Ask your Realtor or agents. They have lived or worked in the area for some time so they already have a feel of what suits your considerations when it comes to purchasing a home.

7. Submit your offer and work on contract negotiations

Once you have found that dream home, be ready to place an offer and to put it in writing. Your Realtor needs to fill out a contract which includes the following details:

  • Location of the property / Address
  • Price
  • Mortgage Terms
  • Provision of title / ownership
  • Closing date
  • Earnest money deposit – cash, check, or promissory note
  • Arrangement on taxes, utilities, etc between buyer and seller
  • Agreement and provisions on which party will take up payment for insurance, other inspections
  • What type of deed will be granted
  • Other requirements such as Attorney review for the state of New Jersey
  • Provision on a walk-through inspection prior to closing
  • Timeline on offer
  • Other contingencies

Most of the time, an initial offer is not accepted by the seller. So here is where the negotiations come in. The Realtor acts as the liaison between the buyer and the seller in terms of discussing the price and terms. Once the parties have come up with an agreement, both the buyer and the seller will sign the revised contract.

8. Undergo attorney review during the contract phase 

The state of New Jersey requires an attorney review. This is the period where after both buyer and seller has signed a contract, it still has to undergo a legal review. The deal only becomes final  after the attorney review has been concluded. This process can take just a few days to weeks or even months. The downside with this process is that while in attorney review, either party can still back out. So to get you through this process as quickly as possible, we suggest that you take a proactive role.

  1. Be as involved as you can in the buying process. Ask your agent about his or her assessment of the sellers and what they are looking for in a buyer. This way you and your agent can work as a team to create a good pitch.
  2. Be honest and transparent in your negotiations, as communicated by your agent. This will make the sellers feel that you’re not trying to one up them.
  3. Be represented well by your agent. As much as possible, ask your agent to formally give the offer in person and not to just email it. It would also be good if the document will be supported by your other qualifications as a buyer. This would make the seller feel that you’re really intent on the purchase.
  4. Be focused on what you want to accomplish. Inform your agent and the attorney that you would like to breeze through the review as soon as possible.

When the attorney review is completed, this makes your contract official and you can now buy your New Jersey home. You just need to undergo the mortgage processing, appraisals, and coordinating inspections with a licensed New Jersey inspector.

9. Final inspection and other negotiations

You really can’t expect a property to be in perfect condition. Basically, you need it to be structurally sound, leak-free, and with utilities in good working capacity. There will most likely be some needed home repairs or upgrades. But that’s part of the experience, right? Some aspects you can compromise on, but on others, you can negotiate with the seller through your attorney and realtor.  After which, you’ll be done with mortgage appraisal and then you’ll be provided with the date wherein you must fulfill the mortgage commitment. Then your attorney will order the other documents needed for closing. .

10. Sign your Mortgage

Prior to signing your mortgage contract, make sure to review all the fees. At closing, here are some of the common inclusions:

  • Attorney fee
  • Appraisal fee
  • Home inspection
  • Partial property tax (if closing happens mid-month
  • Courier fees
  • Percentage of loan amount
  • Government recording fee
  • Transfer tax

It would be good if you check with the mortgage company if they received all the needed documents related to your application. If you have already agreed on a rate, you want to make sure that there are no delays in the processing.

11. Hire Home insurance

As a first time home buyer in New Jersey, it is also important to protect your new investment. This means getting a homeowner’s insurance policy. It is important to keep in mind that when you calculate monthly mortgage payments, you must also include the cost of home insurance.

Factors such as location, type and features of your home will affect the type of insurance that you will need. Choosing your home insurance policy depends on your most important considerations, be it coverage, price or service. Prior to closing, you need to have your home insurance policy ready. A statement that an insurance policy has been issued, as well as the paid receipt, need to be presented at closing time.    

12. Closing

Usually, the final walk through inspection is conducted by the buyers 2 days before closing. Ideally, this is done when the sellers have already moved out. When it comes to payments, you should consult with your attorney on the process and needed amount at closing time. Payments are usually done through bank wire, bank checks, or certified funds.  

Being a first time home buyer in New Jersey involves a lot of steps. You would often find yourself thinking, planning, researching, consulting, searching, then re-thinking again before you actually come up with a final decision. It might be intimidating at times, considering New Jersey home prices. But all it takes is that one big leap. Armed with the basic knowledge and available financial programs and support team, your first time home buying process can be a walk in the park.


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