Questions on Buying a Home     

What's My Price Range?

Determining how much house you can reasonably afford, and the sizes of your mortgage, requires carefully evaluating:
  • Savings - how much have you set aside to cover a down payment on your home, as well as your closing costs? Many loans require 20 percent down payment.
  •  Affordability - how much can you safely borrow, and still meet all your financial obligations?
When evaluating how much you can afford for your home and mortgage, lenders usually use two rules of thumb:
  • Your maximum monthly mortgage payment should not exceed 28 percent of your gross (pre-tax) income.
  • Your maximum debt load, including your mortgage payment, should not exceed 30 percent of your gross income.
What does my credit profile look like?
 
Request your free credit report at annualcreditreport.com to check for errors and negative information on your report. For a small fee you can get your credit score.
Lenders typically require a minimum credit score of 620 or 640 and higher for government-insured loan programs, but for the lowest mortgage rates you need a credit score of 740 or above.

What's the difference between being pre-qualified and pre-approved for a mortgage?
 
Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford.
Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specified amount.


Estimating Closing Cost
 
           Typically, a New Jersey buyer shpould budget approximately 2% - 5% of the purchase price for closing costs and prepaid expenses, excluding the down payment. The actual amount can vary significantly depending on the mortgage, title insurance, propety taxes, insurance, property type, closing date, and whether the purchase is subject to the NJ Mansion Tax.

Legal and Title Costs

1. Attorney Fee: Normally $1,300 - $2,500 depending on the attorney, property type, and complexity of the transaction.
 
2. Title Search: approx. $300 - $700

3. Title insurance: approx. $3 - $5 per $1,000 of coverage, depending on the policy, transaction, endorsements, and applicable discounts. 
 
4. Recording Fee: Required by local County clerk approx. $500 (per instrument to be recorded).
  
4. Survey: Averages $500 - $1,000, depending on the property and type of survey required.
Mortgage Costs
1. Application Fee: Set by lender, approx. $250-$500
 
2. Lender's Attorney Review Fee: $300 - $600 average where applicable
 
3. Appraisal Fee : approx. $500 - $700
 
4. Prepaid Interest: Varies according to the loan amount, interest rate, and closing date. This covers daily mortgage interest from the closing date through the end of he month.
  
5. Escrow Fees: Paid to lender, covering approximately 3 months of real estate taxes, fire/flood insurance, and PMI premium where applicable.
 
6. Points: Paid to lender usually 1-3 (1 point =1% of mortgage amount).
 
7. Private Mortgage Insurance (PMI): Usually required if mortgage is more than 80% of purchase price. Estimated cost: 0.5% -1.5% of the loan amount to pre-pay for the first year.
 
Home Inspection Fee
1. Home Inspection: $500 - $700
 
2. Radon inspection: $200 - $300
 
3. Wood destroying Insect inspection: $200 - $300
 
4. Under-Ground Oil Tank Search (if applicable): $500 approx.
 
Other Costs
 1. Homeowner's Insurance: One family house $1,200 -$2,500/year.

 2. Flood Insurance (if applicable): approx. $600/year
 
  
Condo and Co-op
1. Community entry fee: Usually calculated by some formula of the maintenance, i.e.. 3 times the monthly maintenance
 
2. Move-in fees: $300 - $500 where applicable
 
3. Processing fee: $100 - $300 where applicable
 
 
 
Mansion Tax:

The 1% Mansion tax applies to purchases over $1 million. The graduated fee is generally a seller obligation.