How to Buy a House in New Jersey: A Homebuyer’s Guide
Updated: March 3, 2023
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On average, the value of a home in New Jersey is $472K. Home prices in the state are much more expensive than a typical house in the U.S., which has an average value of $358K. That said, if you compare growth in median home values, New Jersey is slower than the national average — with 11% growth versus 13.5% over the same period, respectively.
If you’re a first-time homebuyer in New Jersey, MoneyGeek’s guide can help you understand and navigate the homebuying process without falling into deep debt. We broke down the importance of mortgage pre-approvals, the various costs associated with closing a mortgage and other significant New Jersey homebuying details.
Choose an Ideal Location
Location is an important consideration when buying a house in New Jersey. Remember that where you choose to live significantly impacts the cost of your home and mortgage. For instance, a house in Allentown costs approximately $582K, whereas a property in Wrightstown has an average price of $234K.
Aside from the home’s cost, it’s also crucial to assess factors like neighborhood culture, access to amenities and overall cost of living to determine the best place to buy a house in New Jersey.
Calculate Mortgage Rates
Understanding mortgage rates is an essential part of the homebuying process. Keep in mind that different mortgage options carry varying rates, and the best one for you will be based on your particular needs and buyer profile. Additionally, factors like credit score and income can affect the type of mortgage you qualify for and your interest rate.
Prepare Down Payment Requirements
Before buying a house in New Jersey, it’s critical to find out how much money you can put down on a home. Remember that your down payment greatly affects the total cost of your loan. That said, some mortgage options — namely, VA and USDA home loans — don’t require a down payment.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage can help you determine how much money you can borrow to finance a home. Plus, having a mortgage pre-approval letter gains you an advantage when making a bid on a property.
Keep in mind that pre-approval is different from prequalification. While pre-approval means your lender is willing to loan you a specific amount, prequalification only shows whether or not you qualify for a loan.
Conduct a Home Inspection
When you find your dream home, you’ll want to make sure it’s in great condition. A thorough home inspection conducted by a third-party professional usually helps in this regard. Through a home inspection, you can find out if there are any issues that you missed and make an informed decision about the property.
Close Your Mortgage Loan
After reviewing the loan terms you received, you can now close your real estate transaction. Expect closing costs at this stage, which are fees you incur for securing a loan for your dream home. In some cases, the seller may cover a portion of your closing costs, subject to negotiation at the time you submit an offer.
New Jersey Homebuying Details
When buying a home in New Jersey, it’s vital to research your new home’s location, explore different mortgage options and compare lenders to find the one suitable for your needs. If you struggle with saving for a down payment, you may seek out homeowner assistance programs specific to New Jersey.
If you haven’t owned a home in New Jersey for three years, you may be eligible for down payment assistance from the NJHMFA. To participate in its program, you need to pair the DPA loan with an NJHMFA first mortgage loan.
NJHMFA’s First-Time Homebuyer Mortgage Program has specific income and purchase price limits that you must meet to become eligible. Note that income limits are based on the location of purchase as well as your family size but may not exceed 140% of the area’s median income.
Frequently Asked Questions About Buying a Home in New Jersey
MoneyGeek answered the most commonly asked questions about the process of buying a home in New Jersey that you need to know.
Before buying a house in New Jersey, it’s vital to ask yourself the following questions:
- What is the best location for your needs and budget?
- What type of mortgage and mortgage rates can you qualify for?
- How much down payment can you afford?
Homeownership isn’t for everyone. Purchasing a home in New Jersey is generally a good idea only when you’re emotionally and financially ready to become a homeowner.
The value of an average home in New Jersey is $472K. Pursuing homeownership in this state may be wise if you don’t mind a higher-than-average cost of living.
Ultimately, the amount of money you need to purchase a house in New Jersey depends on the type of mortgage you’re eligible for and the value of the property you want to purchase.
According to the New Jersey Division of Taxation, the average residential tax bill in the state is $8,965.
Based on our research, two of the cheapest places to buy a house in New Jersey are Trenton and Gloucester City.
sources
- Census.gov. "Quick Facts: Gloucester City, New Jersey." Accessed October 23, 2022.
- Census.gov. "Quick Facts: Trenton, New Jersey." Accessed October 23, 2022.
- Habitat for Humanity. "Habitat homeowners." Accessed October 23, 2022.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 23, 2022.
- New Jersey Division of Taxation. "2021 Average Residential Tax Bill." Accessed October 25, 2022.
- New Jersey Housing and Mortgage Finance Agency. "Homebuyers." Accessed October 23, 2022.
- USDA. "Single Family Housing Direct Home Loans." Accessed October 23, 2022.
- Zillow. "New Jersey Home Values." Accessed October 23, 2022.
- Zillow. "United States Home Values." Accessed October 23, 2022.