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A recent report revealed the average credit score among home buyers in New Jersey and nationwide. The average score for borrowers using an FHA loan has dropped slightly over the last few years, while the average for conventional mortgage loans has remained somewhat consistent.
The report also showed a significant increase in the average debt-to-income ratio among borrowers. This means that people are qualifying for mortgage loans with a higher level of debt today, compared to in the past.
Average Credit Scores for FHA Loans
In October 2018, the property information company CoreLogic released a report that showed the average credit score among home buyers in New Jersey and the rest of the nation. The report also highlighted trends relating to debt-to-income and loan-to-value ratios among borrowers.
One of the most noteworthy findings has to do with FHA loans and credit scores. According to the October report, the average credit score among home buyers using an FHA-insured mortgage has declined steadily since 2011.
During the second quarter of 2011, home buyers who used that government-backed mortgage program had an average credit score of 709. But by the second quarter or 2018, that average had dropped to 681 — an overall decline of 28 points.
(Note: The widely used FICO credit-scoring model runs from 300 to 850, with a higher number being better. Borrowers with higher scores tend to have an easier time qualifying for loans, and ...
Federal Housing Administration (FHA) home loans are a popular financing path among New Jersey home buyers. In fact, data collected during 2017 revealed that FHA-insured mortgage loans accounted for nearly 30% of all home purchase loans in New Jersey.
That put the FHA program in second place behind conventional or “regular” loans, which were the most popular type of mortgage in New Jersey last year.
FHA and Conventional Loan Market Share in New Jersey
The Urban Institute, a housing and economic research group based in the nation’s capital, created an interactive map tool that shows the market share of different mortgage programs. It offers results for the nation as a whole, as well as the individual states.
We used this tool to figure out the percentage of New Jersey home buyers who use FHA versus conventional loans when purchasing a property. As it turns out, conventional mortgage loans still reign supreme.
Here are the market-share percentages for loan programs used last year:
- Conventional, 65.4% of home buyers
- FHA, 29.2%
- VA, 4.3%
That adds up to 98.9% by the way. Special mortgage financing programs, such as the USDA loan designed for rural borrowers, likely made up the remaining 1.1% of loan volume.
Note: These figures are for 2017. The finalized numbers for 2018 were not available at the time this article was published.
Difference Between the Mortgage ...
A recent housing industry report revealed some interesting trends about single female and male home buyers in New Jersey and nationwide. The number of single females buying homes has risen over the years and now exceeds the purchases made by single males.
Married couples still account for the majority of home buying activity in New Jersey and elsewhere across the country.
Survey Statistics for Single Female Home Buyers
Earlier this year, the research department from the National Association of REALTORS® (NAR) published its “Home Buyer and Seller Generational Trends Report” for 2018. This detailed report was the result of a 131-question survey mailed out to 145,800 people who had recently purchased a home.
Among other things, the NAR survey showed that:
“Sixty-five percent of recent buyers were married couples, 18 percent were single females, seven percent were single males, and eight percent were unmarried couples.”
Beatrice de Jong, the Director of Residential Sales at Open Listings, offered some background on these trends for an August 2018 article she wrote for Forbes. She attributed the rise of the single female home buyer to a change in outlook as well as financial circumstances:
“Single women are opting for mortgages before marriages. Modern women accept they have more to offer beyond their traditional domestic roles, and not everyone is ready to be a wife or a mother yet … ...
A fresh round of housing forecasts suggest that home prices in the state of New Jersey could rise faster than the national average in 2019. In some cities (such as Newark, Jersey City and Paterson), home prices are predicted to rise by double digits over the next 12 months or so. These forecasts come from the economic research team at Zillow.
Strong Home-Price Forecasts for New Jersey Cities
Home prices in most New Jersey towns and cities have risen steadily over the last few years. The same goes for most cities across the U.S.
Recent forecasts point to a continuation of this trend. In fact, one set of predictions suggest that many New Jersey cities could far exceed the national average for home-price appreciation over the next year.
In October, the housing analysts and economists at Zillow issued some new projections for home prices in New Jersey. By their estimation, the median home value for the state could rise by around 7.1% over the next 12 months (ending in October 2019). That’s higher than the actual recorded gains of the previous 12 months. It’s also higher than the national forecast for the next year.
But when you drill down to the municipal level, the home-price forecasts are even stronger. For some cities and towns in New Jersey, the company has predicted double-digit home price gains between now and fall of 2019.
Here are some examples:
Newark: The team of analysts predicted that the median home value ...
Many home buyers in New Jersey believe that they have to make a down payment of at least 20% to qualify for a mortgage loan. But for a typical home purchase, a down payment of that size usually isn’t required. In fact, a new report showed that 52% of buyers in New Jersey and nationwide made down payments of less than 20% when purchasing a property.
Down Payments Below 20% Are Very Common
There are a lot of myths and misconceptions regarding down payments in New Jersey. One of the most prevalent misconceptions has to do with the size of the investment, and the amount that is required to qualify for a mortgage loan. Surveys by the National Association of REALTORS® and other groups have found that many home buyers believe they have to put down at least 20% on a purchase.
Last month, the economic research team from Zillow put out the latest edition of their “Consumer Housing Trends Report” for 2018. It’s a wide-ranging survey covering all kinds of topics that are relevant to home buyers. Their survey “gathered information from a total of 13,439 key household decision-makers” from New Jersey and other states across the U.S.
Among other insights, their study showed that 52% of home buyers make down payments of less than 20% when purchasing a house or condo. This clearly debunks the myth that borrowers have to put down 20% or more to qualify for a mortgage loan.
Granted, there may be cases where a 20% down ...