Tag: renting in NJ

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General

Pros and Cons of Buying a House in New Jersey

Pros and Cons of Buying a House in New Jersey

Deciding between buying a house or renting an apartment in New Jersey is an important decision and ultimately boils down to your circumstances. For many, homeownership is often seen as the next step in adulthood as it means you now own an appreciating asset and can decorate and remodel as you see fit without needing to ask a landlord. Still, buying a home isn’t always the best choice, so how do you decide which one is right for your circumstances?

Advantages of Owning a Home

Buying a home is a huge decision and requires a lot more planning than renting a home or apartment. However, there are a lot of benefits to being a homeowner that you might not realize, especially if you have been renting for a long time. 

Consistent Monthly Payments

The biggest benefit is the monthly cost especially in areas with a low cost of living. Gone are the days where you wait for the rent increase letters from your landlord when you want to renew your lease. Instead, you have a 30-year fixed-rate mortgage where the principal and interest rates are the same every month. You can even reduce your payment by refinancing it if the rate drops. If you’re comfortable paying a higher monthly amount, you can go for a short-term mortgage.

Build Equity and Net Worth

Another huge benefit of owning a home is that you build equity with each payment you make. Take a look at the amortization schedule you received that came with your closing paperwork to see how much you’re actually paying towards the interest chargers and loan balance. In the beginning most of your payment will go towards the interest, but over time you’ll pay down more of your loan, which will build equity. In general, it can take up to 10 years to actually build positive equity for your home, but the longer you live there the more wealth you can build.

On that topic, you can convert your home’s equity to cash, which you can use to pay for improvements on your house, consolidate your credit cards, pay for college or a business, or even purchase a vacation home or rental properties. The best part is that you don’t need to sell your house to have access to these funds.  There are a few ways you can have access to the cash:

  • Cash-out refinance – this involves taking out a larger loan amount for more than you currently owe and pocketing the difference. You can usually borrow up to 80% of  your home’s value
  • Home equity loan – a popular choice if you’d rather borrow against your equity without replacing your current mortgage. You’ll get the funds in a lump sum and pay a fixed rate.
  • Home equity line of credit (HELOC) – this works like a credit card but is secured by your home. You only make payments on the amount you use and can pay off and reuse the credit for around 10 years or so.
  • Reverse mortgage – If you’re over the age of 62 you can convert your equity to cash and you won’t have to worry about a monthly mortgage payment

As you increase your equity over the years, your home value will also increase over time so long as there’s no major hiccup in the real estate market similar to the 2008 housing crash. This, in turn, increases your overall net worth and if you do sell, you’ll hopefully be able to pocket a bit of cash.

Build Community

Owning a home provides stability, which is especially important if you have children. Most homeowners live in their homes for 10 years before selling, which means you have plenty of time to get to know your neighbors and for your children to make lifelong friends. Plus, your kids will likely do better in school as they won’t have to worry about moving and you can be involved with community organizations like school boards, PTA, etc.

Disadvantages of Owning a Home

While homeownership is great, there’s a reason why many people opt to rent apartments instead of purchasing a house. Not everyone is right for ownership so it’s important to weigh the pros and cons before you decide to take the plunge.

High Upfront Costs

While owning a house might be cheaper in the long run, you have to put up a lot of money in order to close. People often save for years to have enough to afford the downpayment for a house. And that’s just the beginning of upfront costs. Unless it’s specifically stated that the owner will pay for closing, you will need to provide it. Closing costs generally run from 2-5% of the purchase price and includes fees such as:

  • Property tax – New Jersey has the highest property taxes in the nation!
  • Mortgage insurance if you end up putting a down payment of less than 20%
  • Home inspection
  • First-year homeowner’s insurance premium
  • Title search
  • Title insurance
  • Points – prepaid interest on mortgage

It can take up to five years to recover all these costs!

Ongoing Costs

On top of the upfront money you need to spend, you’ll also have to pay a lot on a monthly basis. Sure, your mortgage might be cheap, but once you include everything else, you might end up paying the same if not more as rent on a home. If you’re used to renting, all of the costs you need to pay for may come as a surprise. You probably already pay for electricity, gas, and internet, but if you own your home, you have to also pay for:

  • Water
  • Sewage
  • Trash collection
  • Heating
  • Homeowners Association dues (if applicable)
  • Homeowners Insurance
  • Private Mortgage Insurance – if you paid under 20% with your down payment
  • Property Tax

All of this can add up to hundreds if not thousands of extra dollars that you’ll need to include in your monthly budget. Make sure you have enough money to pay for all of these as well as the basics like food, gas, car insurance, clothes, etc.

Maintenance

You are the owner of your house, which means you are responsible for everything! So if your roof leaks or an appliance breaks down, you will need to figure out how to fix that and pay for it. Living in an older house might seem romantic, until there’s something you need to fix every month. Before you fall in love with a place, ask about upkeep on key items like the roof, boiler, septic tank, etc. Ideally, you’ll want a place with a relatively new roof and appliances as they should last around 5-10 years with yearly check-ups/maintenance. 

And speaking of maintenance, don’t forget you have to maintain your entire property. So if a tree falls down into your neighbors yard, you will need to pay for its removal. If you are part of an HOA you will also have to follow the rules set out including keeping your lawn mowed, having a well-kept house, and, if you have a dog, ensuring you have the appropriate enclosures to prevent your dog from entering your neighbor’s property.

Less Mobility

What might have seemed like a dream house can end up being a nightmare. Maybe you hate your neighbors or perhaps you got a great job opportunity on the other side of the country. Whatever the reason, you need to move quickly. Unfortunately, selling a house can take some time especially if you’re moving during the winter. And while houses have been selling quickly, there’s no guarantee this will last. Plus, a fast-moving market means it will also be harder for you to find a new home without putting down a lot of money. If you know your career requires frequent moves if you just want flexibility, home ownership might not be the best option.

Falling Property Values

Homes are generally an investment and their value continues to grow over the years. But that doesn’t mean that’s always the case. For example, in 2008 property values plummeted due to the housing crisis and those who had to move during this time ended up losing a lot of money as their houses were selling for below the initial purchase price. Ideally, you can ride out the downturn and wait for the market to rebound, but that might not always be the case. Still, buying is generally a safe investment and you should only consider purchasing a place if you plan on living there for a long time.

Move to Your NJ Home

Whether you decide to buy a place or rent, NJ Great Movers can help make your transition seamless. We’ve moved hundreds of people all over New Jersey so we know exactly how to navigate the streets and homes of NJ. If you need professional NJ movers, look no further! We can help with local or long-distance moves and offer full packing services and storage.

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Moving Tips

Crucial Steps to Take Before Moving to NJ

Crucial Steps to Take Before Moving to NJ

New Jersey, also known as the Garden State, is a popular destination for a variety of reasons, with the most common one being its distance to two major cities: NYC and Philadelphia. While it’s often overshadowed by New York, there’s plenty of other reasons to move here including affordable housing, parks and beaches, great schools, and more. So whether you’re a young professional, a growing family, or perhaps a retiree, moving to New Jersey is a great option. Below are some hints and tips on how to choose the right place in New Jersey for you.

Check Out Different Towns/Cities

New Jersey might be the fifth smallest state when it comes to land area, but there’s a lot of diversity when it comes to the various towns and small cities. If you want to commute easily to NYC, look at Hoboken or Jersey City as you can simply hop on the PATH train to access Midtown, the West Village, and Battery Park City. Due to its proximity to NYC, both locations have a more urban feel and offer a wide variety of amenities and great night life, making it perfect for young professionals. 

However, if you’re looking for something a bit quieter, there are plenty of options to choose from including:

  • Montclair – offers an urban/suburban feel with plenty of restaurants and retail shops. It also has highly rated public schools and low crime
  • Princeton – home to the prestigious Princeton University, the town of Princeton is often considered one of the best places to live. The historic downtown is very walkable with plenty of food and shopping options.
  • Closter – Located in Bergen County, this small town is great if you’re looking for a more rural environment, but still want access to major cities. NYC is about an hour away via NJ Transit buses. Considered the Historic Hub of the Northern Valley, Closter offers a quaint downtown area as well as an outdoor mall that includes grocery stores, restaurants, and a movie theater.

Know what kind of environment you want before moving. You don’t want to move to the suburbs if you’re looking for a more bustling environment. Some factors to consider when comparing neighborhoods include:

  • Community – each area has its own culture. Some towns are more conservative while others are more progressive. Find the one that suits you!
  • Cost of Living – the cost of living varies widely between towns, but the more amenities you want where you live, the more expensive it will be. Living in Hoboken will be more expensive than a place like Morristown for example.
  • Amenities – what do you want from the neighborhood? If you’re an outdoorsy person, you might want to move to a place that has easy access to one of the many parks in New Jersey. Young professionals, on the other hand, might want to move to a place that has an active nightlife. Figure this out before you move so you’re not stuck somewhere that doesn’t offer the things you want. 
  • Commute – While New Jersey traffic might not be as bad as NYC, you can experience traffic jams during the morning and evening rush hour. If you plan on commuting to NYC or Philadelphia, make sure you are okay with the commute time! An hour might not seem that long initially, but it might slowly wear on you if you have to make the trip 5 days a week. 

Decide Whether to Rent or Buy

New Jersey has plenty of housing options and you can choose to buy or rent. For either option, peak season is during the summer months between Memorial Day and Labor Day. If possible, try to find a place between October and April as while the supply might be lower, you’ll have a better chance of negotiating the rents and home prices down.

When it comes to renting, there are plenty of options to choose from including apartment buildings to family homes. Tenant laws in New Jersey are meant to protect renters. For example, landlords cannot charge more than 1.5 times the monthly rent for a security deposit. The best part about renting is that you can leave when your lease is up. Have your paperwork ready if you end up finding a place you love as apartments tend to move fast in the more desirable locations. You will need to show proof of income, ID, and occasionally have references ready. Unlike NYC that requires 40 times the rent,, New Jersey landlords are a bit more lenient, requiring 30-35 times the monthly rent as the annual income requirement. You might also need to pay Broker fees, though it’s less common than NYC.

If you want to buy, you have plenty of options to choose from condos to townhomes to family estates. The housing market can be fierce, especially in areas with good schools and access to amenities so you’ll need to move fast if you find a place you like. If you plan on buying a condo, make sure you familiarize yourself with everything you will need to pay for including things like insurance, condo fees, taxes, maintenance fees, etc.

Find a Place That Matches Your Budget

With the cost of living continuing to rise, finding a location that you can afford is imperative. On average, New Jersey tends to be more expensive than the national average, but compared to NYC and Philadelphia, it is cheaper. Still, that doesn’t mean all of the towns are affordable as there are plenty of wealthy areas like Princeton and Montclair. In general, most locations that have great schools, lots of amenities, and access to NYC tend to be on the more expensive side. Likewise, there are more affordable locations like:

  • Phillipsburg – A rural town equidistant to NYC and Philadelphia. It has seen an economic revival in the past 20 years due to the Urban Enterprise Zone initiative which has reduced sales tax to 3.3125% to encourage more shopping and businesses. There has also been continuous talks of re-establishing a train from NYC to Phillipsburg so it could become a bustling town in the near future.
  • New Brunswick – A regional commercial hub for Central New Jersey, the area is home to Rutgers University, the largest university in New Jersey, and is also a popular commuter town for those who work in NYC. 
  • Toms River – A perfect location for those who want to live along the water. You get the Toms River that goes right through town and easy access to the beach along the Atlantic Ocean. It’s one of the safest cities in the United States and tends to attract families and retirees. 

Depending on where you move in New Jersey, home ownership isn’t just a pipe dream. There are many great locations where you can still get a home for under $300,000. In fact, compared to neighboring states, New Jersey has a higher percentage of homeowners! One thing to keep in mind is that New Jersey has the highest property taxes in the United States. And while HOAs do exist, they aren’t as prevalent as many homes and communities were created pre-1980.

Speaking of taxes, New Jersey does not have any city taxes, unlike New York. That means if you live in New Jersey but work in NYC, your take home pay is more than if you lived and worked in NYC since you aren’t paying NYC taxes. It also has progressive state taxes so you only get taxes on the income you earn above a certain bracket. 

Besides housing and taxes, you also have to consider other areas of your budget. For example, if you move to a suburban or rural area, you will definitely need to invest in a car, which means insurance and gas. Luckily, New Jersey tends to have cheaper gas than neighboring states as it is a major shipping hub for gas and oil. There are several options for grocery stores including Aldi and Trader Joe’s for budget-friendly options. You can also pick up fresh vegetables and fruits at your local farmer’s market!

Explore the Town

Have you narrowed down your choice of towns to one or two? Then now is a perfect time to actually spend time in the area. This is a crucial step as it will give you a better idea of the community vibe and atmosphere so even if you’re making a long-distance move to NYC, rent an AirBnB and spend a few days or week in the area. The more time you can familiarize yourself with the area, the better. 

Don’t treat this like a vacation! Use this time to act like you already live in the area. Travel to the grocery store, gym, school, work location, etc. to see how long it will actually take you to get to these places via your preferred method of travel. Outside of the major NJ cities, you’ll likely need to rent a car to get around, but you can always check to see if the area is bike and/or pedestrian friendly if you enjoy walking around town. If you plan on commuting to NYC via bus or train, ride it so you get an idea of how long it will take and if it’s something you can handle on a daily basis. You should also travel to areas of interest whether that’s to parks, the beach, or cultural institutions. Don’t forget to check out the local events to see if there’s anything happening. That way you can get to know your neighbors beforehand!

Not everyone can take time off work to explore a new city. If that’s the case, then explore digitally via Google Street View. Check out points of interest and map out how long it will take to get to these locations. While it won’t give you the same experience, it’s better than nothing!

Moving to New Jersey

Your move to NJ doesn’t have to be stressful. At NJ Great Movers, we have helped hundreds of customers relocate with no issues. Our experienced moving team has handled every type of move in every situation from moving during a blizzard to the scorching summer heat. So whether you’re making a local or long distance move we’re here to help. Reach out to us and we’ll answer any questions you might have.