Buyer tips

Buying a home can be a daunting process. For those with financial stability and the right resources, it can be very rewarding. Here are some tips you can use to prepare yourself for a successful purchase:

• Examine your financial situation. Look at your expenses and monthly budget to determine what you can comfortably afford. Many financial experts recommend spending no more than 28 percent of gross monthly income on your mortgage, property insurance and taxes, but each person’s situation is unique.

• Research and determine your preferences. First, determine what type of property you are looking for (single-family home, condominium, townhouse, commercial property, etc.). Think about your desired location. Determine what factors you will be looking for in shopping for a home and separate them into absolutes, electives, and frills.

• Work with a REALTOR®. REALTORS® provide expertise on market trends, property conditions, and many other aspects of a real estate transaction. By working with a REALTOR®, buyers can see comparable homes for sale, track sale prices in the desired neighborhood and gain insight on many other aspects of a real estate purchase. Be upfront and honest with your REALTOR® about your preferences and financial situation. Find a local REALTOR®. Find out why it pays to work with a REALTOR®. Download a free brochure in English and/or Spanish.

• Make the most of the current market. In today’s market, a high inventory of homes for sale offers buyers a larger selection from which to choose. Changes in home prices also mean there could be trade-up opportunities or homes that you could not afford last year that now fit your budget. Because of the current economic climate, foreclosures and short sales are situations where buyers can often get a good deal.

• Know your mortgage options. REALTORS® routinely suggest that buyers start the mortgage process well before bidding on a home. Mortgage rates still remain near historic lows so buyers should take time to shop around with different lenders to find the one that's right for them. The terms surrounding the mortgage loan are equally as important as the interest rate. Buyers should meet with a loan officer to verify their income, review outstanding debts, run a credit check and obtain a preapproval letter that states the mortgage amount for which the buyer can qualify. Another important step is figuring out how much of a down payment can be afforded. Many lenders now have specific down payment requirements, although down payment requirements are significantly lower for FHA-insured mortgages and those obtained through the New Jersey Housing and Mortgage Finance Agency.

• Consult mortgage guides. Getting a mortgage can be a challenging and complicated process. Take advantage of the home mortgage resources available through REALTOR.com, such as a monthly payment calculator, mortgage rates and quotes, educational tools, and more. Below is a list of other helpful information tools concerning mortgages.
     o Read Understanding Mortgages brochures:
          - Traditional Mortgages 
          - Specialty (Nontraditional) Mortgages
          - Federal Housing Administration (FHA) Mortgages
     o View the increased FHA loan limits instituted by the 2009 American Recovery and Reinvestment Act. To find the Fannie Mae and Freddie Mac conforming loan limits in your desired area, choose "Fannie/Freddie" in the drop-down menu called "Limit Type."
     o Learn about Fannie Mae incentives for buyers.

Additional Resources
- A Look at Mortgage Options in Today's Market
- Home Buying and Selling 101: Steps New Jersey Residents Should Take to Make Sound Real Estate Decisions
- Mortgage Tips from the Federal Reserve Board
- 10 Steps to Homeownership
- Environmental Resources
- Home buying guides from Fannie Mae
- REALTOR.com
- Why Rent When You Can Buy?
- Why Rent When You Can Buy? (Spanish version)