New Jersey: FHA Loans

A major name when it comes to progressive industries, New Jersey ranks 4th in per capita personal income exceeding average national values and second in median household income pegged at $67,443. Things are looking up for New Jersey's real estate market as more and more customers set their prospects on the state's housing programs.

Why is it favorable to apply for FHA loans in New Jersey?

A $6.25 million worth of redevelopment grants was awarded by the Balanced Housing Funds Preservation Funds for some counties within the state. In the late quarter of 2006, a total of $25.8 million funding for affordable housing in New Jersey was announced by Commissioner Susan Bass Levin in association with the HMFA (Housing and Mortgage Finance Agency). The funds granted by the HMFA are broken down as follows: $7.8 million to the Federal Low Income Housing Tax Credits, and $18 million to Balanced Housing/ Home Express. An estimate of $74.5 million worth of investment capital is projected to be obtained from the projects that are to benefit from the grants. With a high concentration of Fortune 500 companies, 30 municipalities listed as Urban Enterprise Zones, a booming manufacturing industry, being the largest petroleum holder apart from the Mid-Eastern countries, having a favorable transport and trade system, and a generally soaring economy, more and more investors are allured into establishing businesses in New Jersey. Above all, New Jersey has a stable and powerful real estate industry with the lowest recorded prime interest rates.

Specific allocations of the combined funds, which will be used in the preservation and development of housing programs, are in Bloomfield, Bridgeton, Camden, Jersey City, Laurence, Mantura, Morristown, Newark, Orange and West Orange counties / municipalities.

When is it best to apply for mortgages?

The current average interest rate for first-time home buyers in New Jersey is posited at 5.625%. Knowledgeable buyers would know that it is best to apply for FHA loans or mortgages when mortgage rates are lowered. For creditworthy clients, whom banks charge with prime interest rates, as well as first-time home buyers in New Jersey, it is advisable to apply for FHA home loan programs during 3-month or 6-month intervals where the PLR or the Prime Lending Rate is usually changed (lowered) to attract new customers. The Prime Interest Rate, which is determined by both discount rates and federal funds rate, may change in favor of many home buyers since Federal funds for New Jersey are projected to increase partly resulting from the major grants issued by the state government. Moreover, maximum interest rates may be subject to change due to the in-flow of funds in New Jersey.

What application pre-requisites are specified in New Jersey?

FHA loan borrowers are charged, upon application, a 1% fee of the loan amount which is later on reimbursed by the lender upon closing the loan. Applications are open only to individuals and not corporations. Each applicant is expected to procure a current Section 8 housing voucher from HUD-approved PHAs (Public Housing Authorities), a document certifying that applicant has completed a home-buyer education course, and a minimum down payment fee of 3.5% of the loan unless otherwise stated or agreed upon.

What are some examples of mortgage-loan calculations in New Jersey?

The state of New Jersey has pre-determined FHA limits set by the 1990 National Housing Act. According to the New Jersey Housing and Mortgage Finance Agency, 97.75% is the maximum mortgage value of the appraised value of a loan that is over $50,000 while 98.75% is the maximum for loans with acquisition values of less than $50,000.

Property rehabilitation which falls under re-financing loans requires that the cost of both rehabilitation and projected rehabilitation work be equal to or greater than the minimum cost of new improvements. For those interested in such a loan program, a rehabilitation administrative fee of 1 1/2 % is charged plus inspection or re-inspection fees of $200 for four required inspections.

Did you know that in New Jersey, it is possible to obtain a 100% financed loan?

It may be hard to believe, but a chance for a 100% financed-loan is applicable for properties in New Jersey. To obtain more information regarding this program, it is best that the buyer researches on pre-approved homes under the One Hundred Percent Project List.