Discover Effective Ways to Address Common Impediments for Home Buyers in NJ

Don’t Be Discouraged by the Daunting Hurdles to Buying a House and Find Out with Our Experienced Attorneys How to Make the Dream of Owning a House in NJ Come True

The American Dream in the 1940s was considerably different.  It was focused on living in a prosperous, free country that values equality, democracy, and justice.  In the 1970s, sprawling residential neighborhoods gave way to more public schools, stores, and parks.  Suburbia was the American Dream. Over time, the dream converted into an individualistic competition to keep up with the Joneses.  It is a yardstick by which success is measured. Having your own home is the American Dream.  The big front yard, the dog, the kids, you see them in lots of movies.  It is a two-story white house with a wide driveway and bushes along the front.  Of course, not everyone’s house looks that way because we all have different tastes, but the idea of that house symbolizing the American Dream is prevalent even today.

According to a recent poll, 70% of 2,984 adults in the United States view homeownership as the most critical lifetime achievement, followed by retirement, career success, college degree, and family in order of their level of importance.  According to Millennials, homeownership is still essential, but only to around 57% of them.  When those interested in home-buying were questioned about what kept them from having the home of their dreams, 82% answered housing affordability.

Top Difficulties Buyers Face in the Home Purchasing Process in NJ

Coming Up with the Funds for a Down Payment

The biggest challenge for homebuyers is the down payment.  Lenders typically ask for 20% of the listing price, which can mean $30,000 to $60,000 that has to be saved.  Millennials and Baby Boomers have the largest population of any significant era.  But exorbitant student loan debt is a major factor financially for Millennials’ inability to save.  Another is that marriage rates have nose-dived over the last six years as young people prefer to stay single longer to build their careers, pay down their debts, and travel if anything is left over.

Paying the Total Cost of Ownership

In combination with the down payment, the overall affordability of houses is another issue.  Home closing costs vary from $10,000 to $50,000, depending on the property’s value.  The average house in New Jersey sells for $440,080.  If the down payment is 10%, that is $44,000 cash, plus closing costs at an estimated $13,200, that is a tab of almost $60,000 to get your foot in the door.  Property taxes, at 2.5% annually, also affect the affordability of a house.  The house may require some sprucing up if it isn’t brand new. Maybe the water heater is on its last leg, or the yellow tile in the downstairs bathroom simply has to go.  Everything can add up fast and burden your budget, making it impossible to afford.

Lack of Options

Availability is another problem, especially in major cities and highly desirable areas. House listings don’t last more than 24 hours on real estate sites. Potential buyers are screened carefully as sellers look for the cream of the crop.  The Baby Boomers are to blame.  Boomers live longer and see the family home as an investment they might be willing to rent, but sell.  Also, they have more economic solvency and push the housing price further into the stratosphere.

Unattractive Credit Profile

Another problem is poor credit history.  Bankruptcy, credit card default, and excessive debt can have lenders turning buyers away from their American Dream.  Student loan balances are higher now than ever.  Balances are in the hundreds of thousands of dollars.  A $600 student loan payment and a $2,000 mortgage require two incomes to cover the approximate debt of $40,000 annually, so if two people want to buy a house, they need to make enough to satisfy the bank.  The median credit score has jumped 20 points in the past decade as tighter lending standards add to the complexity of getting a home loan.

Fluctuating Income and Working for Yourself

The final problem is jobs.  The pandemic changed the employment panorama for many people.  Lay-offs led to ingenuity, and what was once a side hustle became a career.  YouTube, Twitch, TikTok, and Only Fans became lucrative income sources.  Besides online entertainment, many chose to find their passion and started their own businesses, creating fashion, selling jewelry, writing books, and teaching online.  All of these jobs bring in money, but income can fluctuate.  It is never guaranteed.  Those who are not self-employed are stuck in a pay freeze because of the pandemic.  Businesses lost hundreds of thousands and cannot afford to pay high salaries.  Millennials, desperate to pay down their debts and save enough for a down payment, are working harder for less pay while they wait for an economic turnaround.

Practical Alternatives to Confront Current Housing Challenges

There is no other way to say this:  work hard, sacrifice, and save.  If you want to buy a house, you need a lot of money. That $5.00 latte is costing you $1,300 a year.  The weekend date night to your favorite Italian spot is another $4,000 annually.  Your gym membership is another five grand a year.  If you want a home, you must be willing to give up your luxuries temporarily. You’ll be surprised at how quickly it will add up.  The more you can pay off your down payment, the less you will have to borrow and pay interest.  If it is a question of income, get a second job or look for a side hustle to bring in more money.

Speaking of paying, lower your debts.  You may not be able to pay them off completely, but by lessening the burden, you are a better loan candidate and will have more available cash when needed.  It is good for your credit score to keep a credit card or two, but either keep a low balance or pay it off every month.  It is easy to let that balance creep up one purchase at a time, but you need to be in control of your finances and focus on the end game.

In terms of availability, you will have more success in areas outside of the city.  City property is much more expensive because it is closer to everything, but space is limited. If you are willing to live 20 or 30 minutes out of the city, you could find several houses in your price range.  Also, only look at houses within your budget, even if they are the only available possibilities.  Be patient and wait for what you can afford.

Get pre-approved by a reputable lender.  Sellers take great interest in buyers who can show they can afford the house.  It gives them confidence that there won’t be any loan issues at closing.  Pre-approval lets them know what you can afford and puts you ahead of other potential buyers who are not.

Sort Out Home-Buying Challenges with Our Seasoned Real Estate Attorneys in Toms River, New Jersey

The lawyers at the Bronzino Law Firm are real estate legal professionals.  We will work with you through the entire purchase process until the keys are in your hand.  We know how stressful buying a home can be, and we have the skills to keep everything on track.  Whether it is crossing all of the t’s and dotting the i’s in a solid real estate contract, or ensuring the title is free and clear, our job is to get you in your new home.

Closing on a home is exciting because you are just one step away from becoming a new homeowner.  Our attorneys will review all of the closing documents, ensuring they are transparent and that your rights are protected in Middletown, Spring Lake, Barnegat, Sea Girt, Brick, Tinton Falls, Freehold, Lakewood, Manasquan, Ocean Grove, and elsewhere in Ocean and Monmouth County. Contact us today at (732) 812-3102 or contact us here to request your free real estate legal consultation.