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Basic timeline for buying a home in Gloucester County, NJ
Step one: Get Pre-Approved. This will help you determine what you can afford, what you qualify for, and what terms need to be negotiated when making offers on homes.
Step two: Start looking at homes. Search online, have your agent send you MLS listings, and take time to drive through neighborhoods you may be interested in.
Step three: Make an offer on a home(s). This should be done through the agent that represents you as a buyer. Making an offer on a home via the agent listing the home will most often put you in a compromising situation, which is not in your best interest.
Step four: Negotiate terms to purchase a home. IMPORTANT: If you are asking for the seller to pay any of your fees/closing costs, this is the time to arrange this, NOT after you come to a price/terms.
5 weeks prior: Sign contracts and updated mortgage application. Once the buyer recieves a copy of the fully executed contract (signed by all parties), attorney review begins. This is the time when buyer has an oppurtunity for an attorney to review the contracts. Attorney review is 3 business days.
4 weeks prior: Order appraisal, inspection(s), survey, and titlework. You will need to pay for the appraisal upfront ($300-$400). Your lender will order the appraisal. The buyer arranges for the home inspection and termite inspection. A home inspection also requires payment upfront, made directly to the inspection company of choice.
3 weeks prior: Mortgage loan approved as supporting documents requested are completed such as the appraisal, title, and job verification.
2 weeks prior: Clear up any outstanding issues, documents, verifications. Some loans require "outside" approvals such as USDA loans or NJ state first time home buyer loans. Your loan should be sent out to these offices at this point as to not delay settlement.
1 week prior: Call utility companies to transfer utilities (gas and electric are most important).
Several days before: Obtain certified funds needed for settlement costs. Estimate a little on the "high" side. For example, if you believe you need $5,000 for settlement, get certified funds for $5500. Overall you shouldn't have any surprises, but be prepared to possibly reimburse the seller for some items such as oil in an oil tank, water and/or sewer bills they have prepaid.
Day of settlement: Bring your certified funds, photo ID, and any other important items to closing, such as other verifications, reports, or items requested by your lender or real estate agent.
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I've been working with a certain buyer (Mr. Buyer) for a few months now. Since he is looking at the low end of the market his home selection is very limited. We had to work on his credit profile, and we successfully got his credit scores boosted enough to get him approved in the automated system (DU).
So with all this excited Mr. Buyer goes out and finds a GREAT deal, a home that appears to be about $50,000 below market value, which in this case is like having a 33% price reduction. The MLS listing is misleading - it states that the property is corporate owned, when really it is a REO. (Realtor mentioned something saying she can't put "bank owned" anymore on her listings ... that's another topic) FRUSTRATING!!
The MLS also states that the buyer must be approved by"XYZ Big Bank" (Name kept secret since you may work there). We weren't sure if they had a special relationship with the "corporate" owner of the home. Typically we wouldn't care and would just tell someone to get pre-approved with the said lender and then we will write the loan for them. But this one is different, and I knew it before the buyer even talked to the "Big Bank" mortgage rep.
The mortgage rep from "Big Bank" stated that there was no way my buyer could get approved.
I told my buyer before he talked to the "Big Bank" mortgage rep that they would say this. We have him approved for a more specialized loan program called the Tax Credit Prefund Mortgage Program.
In the case of a big, nationally known lender, a buyer may have less home buying options. A big lender like this most likely will not have access to state/county/local programs. Score one for the local mortgage banks! Frankly the "Big Bank loan officer" should have said "I CAN NOT DO THIS", and not "There is no way a lender can do this!"
I founded a career on closing loans "Mr. Big Bank Loan Officer" said could never be done. I thought when Alt-A was out the window that specialized lending was also. Man, was I wrong! - it is more important than ever!
So Mr. Buyer is rejected from buying a home because it is owned by a bank. Mr. Buyer's income docs have already been reviewed by an underwriter. We can even get a commitment for Mr. Buyer. But this STILL wouldn't mean anything to "Big Bank" since they themselves can not get Mr. Buyer approved. Everyone loses, and another home sits longer negatively affecting the local market. If this is the protocal for big banks and their REO inventory, there may be a lot of "shooting of the feet" yet to come.
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So maybe you've taken the jump to get pre-approved and have done your homework to understand your credit score information. Now when it comes to financing your new home, which mortgage option is the best for you? Understanding mortgage programs can be both simple or complex, depending on your needs.
Conventional Mortgages, FHA Mortgages, USDA (100%) mortgages, and VA mortgages are all available for both first time buyers as well as homeowners relocating. Below is a short comparison of these options. We will also discuss first time home buyer loans below.
| FHA | Conventional | USDA | |
| Minimum down payment required | 3.5% | 5% | 0% |
| Typical Credit Requirements* | 620+ | 620+ | 620+ |
| Lower credit scores allowed | Yes | Yes | Yes |
| Monthly Mortgage Insurance Required | Yes | Yes | No |
| Income Limitations | No | No | Yes |
| * Rate/Cost varies drastically depending on the type of mortgage. |
*The scope of this article is to further discuss first time home buyer options. The loan options mentioned above are listed only to make reference to, as each of the options above is available within the options listed below. It may sound a bit confusing, but with the help of an experienced mortgage advisor it will all come together.
As a first time home buyer in NJ, you have several options and angles to purchase a home. We will briefly review several of the current options available. (Aside - A first time home buyer is considered someone who hasn't owned a home in the last 3 years).
The New Jersey Housing and Mortgage Finance Agency has several options for first time home buyers. These options are obtained by working with an approved HMFA lender, such as Treasury Mortgage (A division of Aurora Financial Group). Some confusion exists because the majority of mortgage lenders in business DO NOT have access to these loans. "Big Name" national lenders and mortgage brokers do not have access to NJHMFA options. Even most direct lenders or "correspondent lenders" do not have access either.
This popular option is a mortgage program with a grant option. You may obtain a grant of up to 4% of the loan amount used to finance your new home. For example, if you are buying a home and financing $100,000, a grant of up to $4,000 can be utilized. The most common use of this grant is to satisfy the FHA requirements of a 3.5% down payment (see above chart). In this case, the grant covers the down payment requirement, as well as come of the closing costs. (To see other ways to use your first time buyer options to cover a down payment, closing costs, and more check out Understanding and Using All of Your First Time Home Buyer Options.
Prefund Mortgage Program
A more recent and great addition to the NJHMFA mortgage options list is the Tax Credit Prefund Mortgage Option. This program allows $5,000 of the current federal tax credit (up to $8,000) to be prefunded and used for a down payment and/or closing costs. The benefit of this program over the Smart Start Grant option mentioned above is that the interest rate is .75% lower. For a home purchase price of around $150,000 or less, or for a situation where a buyer doesn't need a full 4% and would only benefit from having a "little" help, this option works very well.
A little more info: These programs have income limitations, but are quite high for many counties. They require a bit more paperwork than other options, but certainly can be worth the extra homework.
Many New Jersey counties have their own grant options for first time home buyers. Grant options vary greatly from several $1,000 to $10,000 or more. These options also usually have income limits. For instance Gloucester County has an income limitation for single buyers that is in the $40k's.
Some counties require no special education on the buyer's behalf, and some require several months of education along with a monetary investment. This article does not have the space to go into multiple county options, but here is something you want to keep in mind; Work with a lender that can help you understand how to incorporate several options together when you purchase your home. The link to the article above explains how a NJ first time home buyer can utilize a grant program, seller concessions, the tax credit and more, all at once!!
There are MANY home buying and mortgage options out there. The most important thing to do is find a lender (mortgage advisor) to work with that understands ALL of these options. DO NOT settle for just anyone. Secondly, educate yourself as much as you can. Even the brightest and most experienced loan officers can benefit from an educated buyer bringing thoughts and options to the table that the buyer may have not brought up otherwise.
Look out for additional articles in this NJ First Time Home Buyer Series.
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Cell - 856.419.3561 | Offering all loan options - Specializing in NJ First-Time Home Buyer Mortgage Loans and down payment assistance programs for New Jersey, 100% Financing, Reverse mortgages.
One of Steve's primary focuses is to work with First-Time Buyers. Steve knows the fears and concerns that come with someone just starting out in life, and his business has focused on first time buyer mortgages and grants for years. It is important that first time home buyers understand all of their options such as the specific mortgages currently available, home buyer grants, seller concessions, the credit scoring model, tax credits and more. It is also important to understand how these options can all be used together to create a successful home purchase.
Some of the first time home buyer options are;
Steve has extensive knowledge regarding credit restoration, and has trained for the specific occupation of a credit restoration specialist. The credit advice that is offered, although very valuable, is free to mortgage clients. Check out some of the articles Steve has written on understanding the credit scoring model and how to improve your credit scores.
Graduate: Certified Mortgage Planning Specialist Institute(CMPS). To learn more about CMPS, check them out at http://www.cmpsinstitute.org/
Specialty programs
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This information is provided to assist Real Estate Professionals and is not intended as an advertisement to extend Consumer Credit as defined by Section 226.2 of Regulation Z. Quoted Interest Rates, Fees, and Programs are all subject to change without notice and are subject to errors, omissions, changes, and/or withdraw at any time.
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