How much money should you have before buying a house in NJ? The cost of buying a home is a top concern for many first-time home buyers. How much do you need for a down payment? And when it comes to closing costs, how much should you have set aside?
In this post, our team at Your Home Sold Guaranteed Realty - Nancy Kowalik Group will break down all the costs associated with buying a house. We’ll also discuss the New Jersey housing market, so you can know how much you can expect to pay.
- In general, it’s recommended to pay a higher down payment, if you can. Ideally, you should aim to put down 20% of the purchase price.
- Closing costs for buyers include lender fees, appraisal fees, property taxes, and home insurance. Overall, the total cost ranges from 2% to 5% of the mortgage amount.
- You’ll also need some money to help you move to your new home. Expenses like hiring a moving company or renting a truck to move your furniture should be factored into your budget.
How Much Money Should You Have Before Buying a House in NJ?
In general, it’s recommended to pay a higher down payment, if you can. Ideally, you should aim to put down 20% of the purchase price. While it’s possible to buy with less, a larger down payment lowers your monthly payments and interest costs, and means you can avoid private mortgage insurance.
On a $300,000 home, you’d need $60,000 for 20% down. With 10% down, you would pay $30,000. Evaluate your budget to see what’s realistic for you. If 10% or 20% is too much for you, you can explore down payment assistance programs. There are some options specifically aimed at first-time home buyers that allow you to pay as low as zero down.
While the home seller will pay for the bulk of closing costs, you’ll still be responsible for a few costs of your own. Closing costs for buyers include lender fees, appraisal fees, property taxes, and home insurance.
Overall, the total cost ranges from 2% to 5% of the mortgage amount. So for a $300,000 home, you would need $6,000 to $15,000 in closing costs. First-time buyer programs sometimes include grants to cover costs, or you can negotiate with the seller to get them to cover some of the costs.
It’s a good idea to have an emergency fund for any unexpected expenses that may arise during the home-buying process or after you move in. This fund should be about two to six months of mortgage payments.
On a $300,000 home with 20% down, you would need to set aside $4,800 to $14,400. This amount will give you enough of a financial cushion so you don’t have to be worried about any surprise expenses down the road.
You’ll also need some money to help you move to your new home. Expenses like hiring a moving company or renting a truck to move your furniture should be factored into your budget.
In addition, if you plan to add new paint, buy new furniture, or make any renovations or updates to the home, you should set aside some additional money. Plan to have a few thousand dollars set aside to cover these move-in expenses.
Total Savings Goal
If you add up all the projected expenses above for a $300,000 home, you would want roughly $100,000 to $120,000 in total savings to financially prepare for the purchase. Having sufficient savings makes a huge difference in being truly ready for homeownership. Work on building your funds over time through smart budgeting before you start seriously shopping.
Of course, it’s essential to meet with a realtor to discuss your budget before you start house-hunting. A professional can give you an accurate estimate of how much you can expect to pay, tailored to your specific situation.
What is the New Jersey Housing Market Like?
In Mullica Hill, New Jersey, the median price of homes in recent months was $478,450, which is an increase of four percent compared to the same time last year. Homes spend a median of 31 days on the market before selling, which is a slight increase compared to last year.
The hottest homes sell for four percent above the asking price. However, Mullica Hill is considered a buyer’s market, which means homes tend to stay on the market longer before selling.
In New Jersey more broadly, the median sale price in recent months was $484,500. This is a 12.8% increase compared to the same period last year. Homes also spend a median of 38 days on the market before selling, which is down from 48 days last year.
In addition, 51% of homes sell above their listing price, while 11.3% experience a price drop. The average sale-to-list price ratio in the state is 101.4%.
Buying Your Dream is Easy with Our Buy It Back Guarantee
An experienced realtor can guide you through the home-buying process and help you find a home that fits within your budget. At Your Home Sold Guaranteed Realty - Nancy Kowalik Group, Nancy Kowalik and our team have years of experience working with home buyers in New Jersey.
Our customers love working with us because we commit to delivering high-quality customer service and provide several unique buyer guarantees like our Buy it Back Guarantee.