Stephanie A. Rizzuto

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Summary: The two biggest issues in housing markets across the country right now are a lack of affordability and a shortage of inventory. But once you get beyond the high-priced NYC metro area, a lot of New Jersey housing markets are doing okay in those areas.  Rising home values and mortgage rates have made housing more expensive in New Jersey and across much of the nation. For many would-be home buyers, a lack of housing affordability creates obstacles to homeownership. This is true for many major cities across the country right now, and we are seeing it within some New Jersey real estate markets as well. Housing affordability tends to be more of a problem in higher-price markets that also happen to be major population centers. New Jersey cities that fall within the NYC metro area fall into that category. Similar conditions are occurring out west, particularly in places like Seattle and San Francisco. Mortgage Rates and Home Prices Have Risen in 2018 Nationwide, the monthly mortgage payment for a median-priced home is now roughly $130 higher (per month) than it was at the start of 2018. Rising mortgage rates have something to do with that. During the first week of January 2018, the average rate for a 30-year fixed mortgage loan was 3.95% according to Freddie Mac. As of mid-September, that average had risen to 4.60%. In New Jersey, home buyers are feeling affordability pressures from rising home values as well. According to Zillow, the median home value for the state of New Jersey climbed to $318,800 in September 2018. That was about 8% higher than the same month a year earlier. The company’s economists predicted that prices within the ...

Once per quarter, the Department of Housing and Urban Development (HUD) sends a report to Congress with details relating to the FHA loan program. Among other things, this report gives us some insight into the average credit score and debt-to-income ratio for FHA borrowers in New Jersey and elsewhere in the U.S. Here are some highlights from the June 2018 report. Average Credit Score Among FHA Borrowers in 2018 Credit scores are a three-digit number based on information within a person’s credit reports. Banks and lenders use these and other tools to evaluate loan applicants, and also to determine interest rates. In short, a higher score can help you qualify for a mortgage loan with a good rate. According to the HUD report, FHA borrowers in New Jersey and nationwide had an average credit score of 670 during the second quarter of 2018. It’s important to note the distinction between “average” and “minimum” credit scores. The 670 number cited in the report represents the average for all loans originated during that time period. But the minimum  score for an FHA loan in New Jersey is significantly lower than that. According to current program guidelines, borrowers can qualify for maximum (96.5%) financing under the FHA loan program as long as they have a credit score of 580 or higher. In fact, this latest HUD report states: “Share of less than 640 credit score rose to 25.9 percent.” That means roughly a quarter of all FHA loans during the second quarter of this fiscal year went to borrowers with scores below 640. This is one of the reasons why some New Jersey home buyers use this program ...

Home prices in New Jersey have climbed steadily over the last few years, and the general consensus is that they’ll probably continue along that path for the foreseeable future. That means more and more home buyers in New Jersey could turn to jumbo loans to help with their purchases — especially in pricier real estate markets like those within the NYC metro area. And there’s some good news on this front. According to a recent industry report, access to jumbo loans in New Jersey and nationwide has increased over the past year. Rising Home Prices, Bigger Mortgage Loans When home prices rise, so does the size of the average mortgage loan. That’s what we are seeing across the state right now, and across the broader U.S. as well. The median home value for the state of New Jersey rose by around 8% over the past year or so, according to Zillow. That’s a bigger increase than the national average for the same time period. Looking forward, the company’s economists predict that prices will continue rising for the foreseeable future. In this way, New Jersey mirrors most real estate markets in the country. House values are expected to keep climbing. So we could see a corresponding increase in the number of New Jersey borrowers using jumbo loans for a home purchase. Definition:  In terms of their size, most mortgage loans can be classified as being either “conforming” or “jumbo.” A conforming loan is one that meets the size restrictions used by Fannie Mae and Freddie Mac. A jumbo loan in New Jersey, on the other hand, exceeds the maximum conforming limit for the county in which the home is ...

Home loans insured by the Federal Housing Administration (FHA) are one of the most popular financing tools used by first-time home buyers in New Jersey. In fact, a recent report by the Urban Institute revealed that 83% of these loans go to first-timers. This article explains why so many first-time home buyers in New Jersey use FHA loans to finance their purchases. Report: 83% of FHA Loans Go to First-Time Buyers During summer 2018, the Washington, D.C.-based Urban Institute published a study that analyzed key mortgage lending trends across the country. Among other things, this report offered some insight into FHA loans and who uses them. Apparently, a lot of first-time home buyers in New Jersey use the FHA loan program to finance their purchases. Across our state and nationwide, roughly 83% of FHA mortgage originations are for first-time buyers. During the recession, usage among first-timers was at 75%. So it seems that more of these buyers are turning to FHA financing these days. Definition:  The Federal Housing Administration does not lend money directly to borrowers. Instead, it insures the loans made by banks and lenders in the private sector. This insurance gives lenders some protection against default-related losses. It also gives borrowers  the benefit of a low down payment and flexible criteria. Here’s a relevant quote from the August 2018 report: “The Federal Housing Administration (FHA), which makes low-down payment loans available to borrowers with less than perfect credit, has typically focused on the first-time homebuyer market, with first-timers making up about 80 percent of their total originations. ...

What does the average down payment on a house look like in New Jersey? For those who live in the New York-Newark-Jersey City metro area, the median investment was $50,000 in early 2018. A report published earlier this year by ATTOM Data Solutions revealed the average down payment on a house in the New York-Newark-Jersey City metropolitan area. Technically it showed the median, which is the midpoint for down payments made by all home buyers included in the study. But that’s the closest we can come to determine the average down payment size. According to that report, home buyers in the New York-Newark-Jersey City metro area made a median down payment of $50,000 during the first quarter of 2018. Median Down Payment Among New Jersey Home Buyers In June 2018, the property data company ATTOM Data Solutions published its “U.S. Residential Property Loan Origination Report” that covered the first quarter of 2018. This report offers insight into a variety of housing trends of interest to home buyers in New Jersey. Among other things, it included down payment data for major cities and metro areas across the country. According to the Q1 2018 report: “Other metro areas with median down payments of $50,000 or higher in the first quarter were Naples, Florida ($64,750); Seattle, Washington ($59,800); Boston, Massachusetts ($55,000); and New York-Newark-Jersey City ($50,000).” Terminology note:  These were the median figures for this reporting period. That means half of all home buyers who used mortgage financing made down payments larger than $50,000, while the other half put down less than that amount. The ...

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