Looking to Upgrade

So you’ve outgrown your current home. Perhaps you’re ready for a different lifestyle, need to accomodate your growing family, or maybe it’s just time for a chance of scenery. Great! But it’s not the first time you’re buying a home, and financial conditions are different.

You probably have a pretty good idea of your savings and of how much of your budget you can (or are willing to) use towards your housing expenses. Good.

Nevertheless, there are many factors that determine just how much you can actually afford for a home. How do you figure that out? It’s easy… Get pre-approved! Speak to a qualified mortgage specialist. He or she will “run the numbers,” check your credit, and give you a pre-approval letter that states the maximum price you can afford for the home. The pre-approval letter will also open certain doors when scouting properties with your realtor. There are properties in Hoboken that will only be shown to pre-approved buyers, as sellers have gotten more judicious about the seriousness of buyers.

We have several mortgage specialists we’d be happy to recommend if you’re not already working with one.

The amount you can pay up-front, or down payment, plays a very important role in your home purchase. Not only does it determine how much you’ll need to borrow, but also how likely it is for you to get the mortgage loan. The days or zero percent financing are over, and nowadays you typically need at least 5% down (usually more). Make sure you have a decent down payment, even if you need to beg, borrow, or…you get the picture. 10% down is good, 20% down is even better, as you also avoid paying mortgage insurance.

With Hoboken’s high rental prices, it’s really not that much more to own the home.
Consider this:

One-bedroom rentals in Hoboken can range in price from $1,800 to $2,500 per month, two-bedrooms can run anywhere from $2,000 to $3,500. For example, in a high-rise waterfront building you’ll pay $2,500 for a one-bedroom apartment…that’s $30,000 a year!! How many years worth of rent are you willing to throw away? Shouldn’t your money be working for you?

On average, you can afford 30% more than what you’re paying for rent due to the tax deductions you get as a homeowner. That being said, you could pay up to $3,250 per month and it would work out to be the same as renting, except you’d actually own the home and be building equity. In fact, after a couple of years you’d actually be paying less than if you were renting—rental rates tend to increase over time, while mortgage payments usually don’t).

$3,200 allows you to afford a nice $450,000 condo, possibly more, including taxes, insurance, and maintenance fees.*

* Based on 20% down payment, average taxes, and other fees

Use our Rent vs. Buy Calculator to run the numbers and see for yourself.

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