Mortgage your home restoration

A commuter rail boom in the New York and New Jersey has enabled many professionals in the area to live further from the big city. One of the places they're moving is Morris County, New Jersey, a group of historic small towns 20 miles to the west. Settled more than 300 years ago, the area offers a well-established, attractive residential base, and solid property investment potential. Morris County includes more than 30 municipalities, and a wide variety of charming unincorporated areas. Homes here are often beautifully restored Victorian and Colonial-era buildings dating back to the early 20th century, which add to an already high quality of life in this attractive area.

Big City professionals also know Morris County for its wide variety of Fortune 500 headquarters, offices, and major facilities. Companies with operations here include AT&T, Honeywell, Bayer and Wyeth, BASF, Novartis, Exxon, and Colgate-Palmolive - good news for anyone who wants to avoid the daily commute to their corporate office job. Many professionals who move to Morris County also find jobs here, and are able to confine their relationship with New York and New Jersey to weekend visits.

Morris County's uncrowded layout is another reason for its popularity. The county has less than 500,000 residents spread across more than 1,247 km and dozens of communities, which compares nicely to the urban sprawl of millions per square mile just to the east. Morris County's low density has put it in high demand with wealthy buyers - it's the sixth wealthiest county in the Nation by median household income, and tenth by per capita income.

Affluence with a taste for old world charm is part of the reason many of Morris County's older homes here have been carefully preserved. A wide variety of old mansions have also been converted into museums, art studios, and schools. When visitors come to Morris County, they make a point of checking out heritage buildings like Acorn Hall in Morristown, which dates back to 1853.

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How the Mortgage Landscape Has Changed

There used to be an almost dizzying variety of mortgage options out there. But that was then. This is now. And anyone who wants to buy a home these days needs to be prepared for a shrinking number of choices. Lenders are pulling back-to the basics. But it's not all bad news. A homebuyer who has proof of income, cash reserves, or good credit should sill be able to find a home mortgage loan. But you have to be ready and willing to do some shopping around first-comparing and negotiating-just like you would if you were looking for a new car. Speak to several lenders. And it's also a good idea to contact several mortgage brokers, too. They act as liaisons between lenders and consumers.

It's never been more important to be an informed homebuyer. Learn the basics of what it takes to get a mortgage. Start by finding out if the lender requires a down payment, how much it is, and if you can afford it. Because of the current economics of housing, most house hunters must have the money for a down payment. That's because the no-down-payment loans that were available during the boom years are now almost non-existent. Many lenders now insist on a minimum of five percent down-more is even better.

You'll also want to check to see if you'll be required to buy Private Mortgage Insurance (PMI)-which will be added on to your monthly mortgage payment. Many lenders insist on this, because if protects them against loss by borrowers who fail to pay. As a rule of thumb, expect PMI if a loan exceeds eighty percent of a home's value. To avoid the added expense of PMI, some borrowers get a "piggy-back" mortgage-which is essentially taking out two loans. The first loan covers eighty percent of the cost of the home. The second is a home-equity line of credit that covers most-if not all-of the balance. However, be aware that these piggy-back loans are few and far between these days; many lenders see them as a risk they'd rather not take. That's because if a homeowner loses the house, the proceeds from the sale would go to paying off the first mortgage-and there's usually very little left from that to cover the second mortgage.

Now, what about those low-or-no-documentation loans that were so popular awhile back? Well, they're basically extinct. Why? Because the single-most important thing to lenders these days is a borrower's credit score. The lenders are relying more heavily than ever on that score to assess a borrower's ability to repay a mortgage on time. Borrowers that look risky will not get those lower-interest loans with good terms. In fact, they're not likely to get a mortgage at all. Loans available to people with credit scores of, say, 660 just a few months ago are no longer out there.

But even if you have a good credit score, you need to be aware that you need to use it wisely. For instance, weigh your choices carefully if you're thinking about taking out a loan for more than $417,000. This is known as a "jumbo loan"-and mortgages that exceed this make lenders very wary; they are perceived to be much riskier than "conforming" loans.

So what's a potential homebuyer supposed to do? If you credit score is on the low side, get serious about improving it before you start looking for a mortgage. It will definitely increase the number and types of mortgage options available, as well as the rates and terms of those mortgages. If your credit score is high, then keep it that way-don't push for the maximum mortgage you can get. Be conservative.

With careful tending, the mortgage landscape in your little corner of the world will start looking considerably more lush, healthy, and beautiful.

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