In the north central part of New Jersey, with the beautiful and expansive Watchung Reservation serving as its backdrop, lies Scotch Plains, a nine-square mile township that is emerging as a top residential area in the state. Ranked by Niche.com as one of 2023’s best places to live in Union County, the town is known for its family-friendly suburban appeal, high quality school system, accessibility to the New York metropolitan area, and amazing community-led culture.
With the community’s many outstanding qualities, Scotch Plains, NJ real estate is definitely worthy of homebuyers’ attention, including those who are entering the market for the first time.
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SCOTCH PLAINS, NJ REAL ESTATE MARKET: AN OVERVIEW
Property types and styles
The housing stock in Scotch Plains is varied, with single-family homes dominating the landscape, followed by apartments, townhouses, and condominiums. Three- to four-bedroom properties are the most common, but there are smaller houses available as well. You’ll also find sizable estates that sit on acres of land.
Given the town’s established status, many of the homes here were built during the 1950s and 1960s. Newer constructions mostly hail from 1970 to 1999, with a small number of homes built from the year 2000 onwards. Split-type, Colonial, and ranch houses are the predominant styles in most neighborhoods, with hints of other architectural styles popular in the state, including Queen Anne, Georgian, Greek Revival, Italianate, and Craftsman.
Market stats
The real estate landscape in Scotch Plains is highly competitive. In December 2023, properties stayed on the market for a median of 54 days, with most sales closing at above asking price. The median price for homes sold in the area was $715,000, up 6.7% year-on-year. This places it in the mid-range of home values when compared with Westfield ($1.2 million), Plainfield ($475,000), and other neighboring towns. The balance between home prices and quality of life is the primary reason why houses for sale in Scotch Plains, NJ remain desirable options.
NAVIGATING THE HOME BUYING PROCESS
Purchasing your first home is a huge milestone so the pressure to get things right is there. In this comprehensive guide, you will learn all the steps to take for a hassle-free experience, as well as tips that will help you acquire the most ideal piece of real estate in Scotch Plains, NJ as your first home.
Step #1: Set a comprehensive budget
Before going house shopping, it’s important to know how much home you can afford. Crunch the numbers and take a long hard look at your finances to come up with a realistic budget.
Get mortgage preapproval. Not only will this boost your chances of getting a seller’s nod, it is also an excellent way of determining your budget. While not final, preapproval gives you a good idea of how much mortgage a lender is willing to grant you, which you can then use as a benchmark in finding the right home.
Once you know your ideal price range for a property, you must also prepare for additional home buying costs. Some of these come after the actual sale, so it’s wise to list down every potential expense as a line item in your budget.
Upfront costs are one-time expenses that usually go towards securing the property.
- Down payment – This is a partial payment you make to reserve the property. The median down payment cost in New Jersey is 18% of the sale price. This fee can be brought down further depending on the mortgage you will get and whether you qualify for additional financing from first-time home buyer assistance programs.
- Closing costs – Both buyers and sellers deal with closing costs. Those that are typically paid by the buyer include fees for loans, appraisals, inspections, title insurance and searches, as well as prepaid property taxes and insurance premiums, among others. In New Jersey, closing costs average 1.7% of the sale price.
Other upfront costs to take into account include reserve cash worth at least two months of mortgage payments, earnest money for a good-faith offer to the seller, and relocation fees.
Ongoing costs are the recurring expenses that are a factor of owning a house.
- Mortgage payments – These are the amortized payments you make to the lender to repay the loan. Your mortgage will likely be the biggest part of your monthly budget, so this should be your starting point when you begin crunching the numbers.
- Property tax – Property tax fluctuates depending on the assessed value of homes in the area, so it’s wise to give this item some leeway in your budget. The current property tax rate in Scotch Plains is $1.621 per $100 of assessed value.
- Insurance – A requirement by mortgage lenders, home insurance provides coverage for buyers in case properties are damaged due to unexpected events. Lenders might also require you to get private mortgage insurance if you cannot put up a 20% down payment on the loan.
The cost of monthly utilities, as well as a rainy day fund for any maintenance or repair work, must also be added to your budget. If you are looking at condos or homes for sale in Scotch Plains, NJ that are overseen by a homeowners association, expect to pay HOA dues as well.
Step #2: Secure financing
It’s important to get a handle on the basics of financing your home purchase, so you know what to expect when you start coordinating with mortgage professionals.
MORTGAGE OPTIONS
There are two main categories of mortgage options:
- Conventional loans come from private mortgage lenders. There are different types of conventional loans, and you can select which has the most favorable terms for you. However, their qualification requirements are known to be stringent. To be approved for a conventional loan in New Jersey, your credit score must be a 620 or above and your debt-to-income-ratio must be 50% or less.
- Government-backed loans are guaranteed by different federal government offices like the Federal Housing Administration (FHA) and the Department of Veterans Affairs. These loans have lower requirements, so they are good alternatives if your credit score prevents you from taking out a conventional mortgage. For instance, it’s possible to qualify for an FHA loan with a credit score of only 580.
ADDITIONAL FINANCING OPTIONS
The New Jersey Housing and Mortgage Finance Agency (NJHMFA) has a first-time home buyer program that you can use to fund your property of choice among the homes for sale in Scotch Plains, NJ.
Under this program, first-time home buyers can apply for a 30-year, fixed rate government loan originated through participating lenders. You must be within certain income thresholds and purchase price limits, and must meet credit score and debt-to-income requirements. This first mortgage loan is mandatory to qualify for the state’s funding assistance programs, which include:
- NJHMFA Down Payment Assistance Program – Provides up to $15,000 in down payment and closing cost assistance to eligible first-time home buyers.
- NJHMFA First Generation Down Payment Assistance Program – An additional $7,000 worth of assistance is available to first-time purchasers who are also first generation home buyers.
BEST PRACTICES FOR MORTGAGE SELECTION
Review (and raise) your credit score
With a good credit score, lenders can extend better loan rates and terms to you. It’s highly advisable to review and, if needed, improve your credit score before you start approaching providers.
The following will help you raise your credit score quickly:
- Clear current bills then continue paying monthly bills on time.
- Keep existing credit accounts open and refrain from opening new ones.
- Reduce your credit balance then raise your credit limits.
- Correct any errors on your credit report.
Compare quotes from multiple providers
The Consumer Financial Protection Bureau strongly advises borrowers to compare offers from a number of providers. Request quotes from three to five different companies so you can check loan amounts, interest rates, and origination fees. Getting a fair look at all your options can result in significant savings down the line.
Get pre-approved
While you’re in the process of researching mortgage offers, you should also get pre-approved. At pre-approval, a lender analyzes your financial standing and based on that, provides you with an estimate of how much you can borrow, as well as potential interest rates, closing costs, and monthly mortgage payments. A pre-approval letter also shows sellers and agents you are a serious buyer who can afford the purchase.
Step #3: Choose a home in the right neighborhood
Now that you have the financial aspects sorted out, it’s time to move to the actual search.
View the homes
You can easily run an online search for Scotch Plains, NJ houses for sale, but make it a point to visit the properties that are among your top options. You can make a much better evaluation of the home’s state and its compatibility with your requirements when you see it with your own eyes.
Explore the neighborhood
It is equally important to survey the neighborhood to know whether it’s a good fit for your lifestyle. Find out how accessible the location is to schools, healthcare providers, dining establishments, shopping centers, parks, recreational facilities, and other community amenities. You should also test how your commute to work will be.
Work with a real estate professional
A Scotch Plains Realtor has a wealth of local knowledge and actual market experience you can use to your advantage. They can recommend more suitable properties that you might looked over during your search. Realtors also have a wide network that includes other professionals whose services you will need when it’s time to close the sale. Their assistance is most invaluable, though, during the next phase of the home-buying journey: the negotiations.
Step #4: Negotiate the best deal for you
Making an offer and starting negotiations can be quite nerve-wracking—especially if it’s your first time—but it’s nothing that a little preparation and some assistance from your agent can’t remedy.
Here are some strategies for negotiating the best deal possible:
Leverage market and property information
A thorough understanding of the local real estate market and the property itself will help you craft a fair offer and serve as a checkpoint during price discussions. Your agent can provide key insights such as average prices, recent sales, and current trends in the area, as well as the property’s history.
Understand seller motivations
An accurate read on the seller’s motivations may give you a negotiation advantage if you are able to meet those needs with your offer. For example, if the seller is in a hurry to sell, you can propose to accommodate their closing timeline. This increases the likelihood of a successful transaction, as well as the seller’s agreement to additional concessions in your favor.
Start with a strong offer
Strategize with your agent to arrive at an initial offer that is competitive, within budget, and leaves some wiggle room. A strong offer will put the seller in a positive negotiating mindset.
You also want to discuss an earnest money offer with your agent. While not required, it will be a good negotiating tactic in a market like Scotch Plains where the competition is tight.
Remember to add contingencies like home inspection and mortgage approval into your offer, giving you a legal exit from the deal if required by circumstances.
Remain objective
Emotions can run high given the stakes, but it’s best to stay objective so you can recognize opportunities when they come. If the seller rejects your initial offer, work with your agent to find creative ways to sweeten the pot. If you are not successful at all, do not despair. Perhaps it’s just not in the cards. You can apply your learnings from this experience as you continue to search for your first home in Scotch Plains.
Step #5: Close the sale
If the seller does accept your offer, then congratulations! You’re just a few steps away from owning your first house.
In New Jersey, closing on a home takes an average of 30 to 45 days, though it’s recommended to plan for delays. The following are the processes to be completed during that period.
Purchase agreement
After the offer has been accepted, you and the seller will sign a purchase agreement that outlines the offer and the next steps. Carefully review the document to ensure that all terms are correctly stated.
Mortgage approval
Even if you were pre-approved earlier on, you still need to submit a formal loan application. Because this typically takes several weeks, you should get the ball rolling as soon as possible after you sign the purchase agreement. While you’re taking care of your loan paperwork, you should also apply for a home insurance policy since this is a requirement for loan approval.
Title search and insurance
A title company will run a title search on the property to check for outstanding taxes, debts, liens, or ownership disputes. If anything comes up, you want to iron it out with the seller before the transfer takes place. The title company will also provide title insurance, and may also manage the escrow account that will hold all funds related to the sale. If an earnest money offer is part of the agreement, you must deposit it into the escrow account at this stage.
Inspection and appraisal
A home inspection is a must, not only because it is required by some mortgage lenders, but also because you want to make sure the property is in the condition the seller presents it to be. Coordinate with the seller regarding any repairs that need to be made.
An appraisal, in the meantime, is conducted by the lender to determine the fair market value of the house. Any discrepancy between the agreed sale price and the lender’s appraisal could result in another round of negotiations and other closing delays.
Final walk-through
Here, you take one final look at the home prior to closing. Ask your agent to schedule a time when the seller is not in the house so you can thoroughly test fixtures and appliances, as well as check whether all post-inspection repairs have been completed. The house must at least be in the same condition as when you signed the purchase agreement.
Closing day
On closing day, you, the seller, your respective agents, and all other third parties come together to sign the final paperwork for the sale. Closing costs and down payment obligations are fulfilled. The title company will transfer the title and the seller will hand over the keys to you.
Then that’s it! After a long and extremely busy wait, you are now a first-time homeowner.
COMMON HOME-BUYING MISTAKES
The truth? Buying your first home will not be 100% smooth-sailing. However, you can significantly reduce the stress from the experience by avoiding these common mistakes.
Skipping small but necessary steps
Things like pre-approval, comparing mortgage options, and doing the necessary research takes some time, but your patience and diligence will be rewarded with the confidence to make decisions and a more manageable process overall.
Ignoring other financing options
You don’t always have to go the private lender route. Government loans may make more financial sense for you, especially if your goals align with loan stipulations. Maximize first-time home buyer programs as well.
Incorrect timing on the offer
If you rush to make an offer without being completely sure of your interest, you will be legally bound to purchase the property if the seller accepts. So it’s best to carefully sit on the decision before making a move. Don’t take too long, however, because that can mean losing out on your dream home.
Not using professional help
You might think that you can save money by not hiring a real estate agent, but that can turn out to be a costly mistake. First of all, the commission fees of both the buying and selling agents are typically paid by the seller. Moreover, without an agent’s expertise, you might end up paying more than what a house is really worth or buying a home with a lot of hidden problems.
Going over your budget
Never buy more than you can afford, no matter how much you love a specific property. The experience of living in your first home won’t be as pleasant if you are struggling to make monthly payments.
BUY YOUR FIRST HOME IN SCOTCH PLAINS, NJ
I am Alyssa Stanek, a proud New Jersey native who is as passionate about matching people with the right properties as I am rooting for the Jets and the Devils. With my mastery of real estate in Scotch Plains, NJ and surrounding areas, as well as skills that have made me an NCJAR Circle of Excellence Platinum Awardee since 2020, I pledge to help find the perfect first home for you.
Give me a call at 201.888.3507 or drop me an email, and let’s get started!