Kenneth Gunther

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FHA-insured mortgage loans are a popular financing option among home buyers in New Jersey. They’re especially popular with first-time buyers, though they are not limited to this group. Here’s a quick look at the basic FHA loan requirements for New Jersey borrowers, updated for 2017.

FHA Loan Requirements in New Jersey

The Federal Housing Administration’s mortgage insurance program is managed by the Department of Housing and Urban Development (HUD). So it is HUD that establishes all of the guidelines and requirements for FHA loans issued to New Jersey borrowers.

Many of these guidelines can be found in HUD Handbook 4000.1, also known as the Single-Family Housing Policy Handbook. But that resource contains nearly 1,000 pages, and you’re a busy person. So we’ve pulled out a few of the most importantrequirements for an FHA loan in New Jersey.

Related: A forecast for the NJ housing market

A Minimum Down Payment of 3.5%

New Jersey home buyers who use an FHA loan to purchase a house must make a down payment of at least 3.5%. Specifically, that’s 3.5% of the purchase price or the appraised value, whichever is less. HUD refers to this as the minimum required investment, or MRI.

The good news is you can obtain down-payment funds from a third party, such as a family member or employer. FHA allows for “gift funds” from a variety of sources, including family members, ...


What is a Survey?

Sep 11
11:51
AM
Category | Blog

What is a Survey?  

A survey is a graphic description of a property, similar to a map, outlining its legal boundaries, dimensions and other features such as structures, roads, driveways, fences, easements, setbacks, flood zones and elevation. It is typically ordered by your attorney or the title company.

Cost:

The cost varies depending on the size and complexity of the property along with other features such as staking each property corner. Without corner stakes the cost of a survey ranges from $700-$1,000.

Why get a Survey?

Surveys are conducted to determine the boundaries between parcels of real estate and are used to determine the exact legal area of ground that will be transferred when a property is sold.   A land survey will give you important information including if the property is in a flood-zone and if the deed shown to you by the seller indeed reflects the correct size of the property being transacted.   The Survey will also determine whether all structures are completely within your property’s boundaries and meet municipal requirements for the required distance, commonly known as setback, from your property’s border.


Understanding Title Insurance

Sep 1
2:42
PM
Category | Blog

When you buy a home, you “take title” to the property and establish legal ownership which is documented by recording your deed in the county’s public records. The objective of title insurance is to protect a buyer’s rights and interest in the property and to assure the property transfer is secure.  In the event that there is an error in the process, the title insurance policy protects you from any financial exposure as a result of those errors.

Prior to issuing the title policy, the title company will obtain a title search which is needed to discover any liens against the property so they can satisfied prior to or at closing.   Approximately 25 percent of all residential real estate transactions have issues with the title and in almost all cases get resolved prior to closing.  The following are some examples of title issues:

  • Unpaid liens for real estate taxes
  • Mechanic liens from contractors who worked on the home but were never paid
  • Judgments, state or federal taxes or business loans owed by the seller
  • Mistakes in the legal description of the property or human error on previously recorded documents
  • Paid mortgages that were not properly discharged

There are two types ...


How the VA Views Credit Scores

Aug 14
10:04
AM
Category | Blog

The VA doesn’t require a certain credit score. Rather, the VA does task approved lenders to determine the veteran has established a responsible credit history over recent years. However, individual lenders do require a minimum score with few exceptions. The most common minimum credit score is 620.

There are three main credit repositories

  • Experian
  • Equifax
  • TransUnion

 All three use the same FICO algorithm to calculate a credit score. Yet while they all use the same algorithm most often the three scores are different.

 For instance, a veteran submits a loan application for an approval, the lender then pulls a credit report as well as requests credit scores. The three reported scores are 710, 701 and 719. In practice, the lender will throw out the highest and lowest score and use the middle one.

 If there are two people on the loan application the lender will also pull scores from the second borrower and use the lowest middle score of the two applicants. These scores may be different because different merchants report payment activity at different times and may not subscribe to all three agencies.

The five categories that affect a credit score and to what extent are:

  • Payment history contributing 35% to the score
  • Available credit at 30%
  • Length of credit 15%
  • Types of credit 10%
  • Credit inquiries also 10% of the score.
...

While getting a VA loan is similar to getting other types of mortgages, there are a few differences. Here are some insider tips you can use.

 If you aren’t sure if you qualify for a VA loan, start with reading “Who is eligible for a VA loan?

  1. Certificate of Eligibility. You’ll need to provide the lender with a copy of your Certificate of Eligibility in order to obtain a VA loan. The fastest way to get this done in the modern digital world? Online. Visit benefits.va.gov to receive a copy of the certificate.
  2. 30 vs. 15. The longer the loan term the lower your monthly payments will be. Typically, the 30-year loan is the most common term borrowers select. A shorter loan term will provide higher monthly payments but there is much less interest paid over the term of the loan. However, the 15-year term makes the payments too high. However, lenders can also offer VA loan terms in 10, 20 and 25 years. To save on long term interest think about selecting a shorter term.
  3. Points or No Points? A “point” is one percent of the loan amount and is a form of prepaid interest to the lender. Paying points ...

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