Tri-County NJ housing inventories are down. The National Association of Realtors (NAR) reports that inventories fell by 1.3 percent in March, leaving inventories 21.8 percent below their year-earlier levels.

Home sales have now posted year-over-year gains in each of the last nine months. But in almost all of those months, the number of homes for sale has declined.

3 Reasons to Explain Why Tri-County NJ Housing Inventories Have Fallen:

1. With home prices down by one-third from their peak, who wants to sell a house right now if they don't have to? That's especially true for the roughly 15% of homeowners who are underwater on their mortgage.
    
2. Banks have decelerated the foreclosure process after they were caught routinely passing off bogus documents to demonstrate ownership. That has slowed the pace at which they're putting Tri-County NJ homes back up for sale.
    
3. While investors initially were buying up Tri-County NJ foreclosures that could be fixed and flipped, or resold, for a quick profit, over the past two years, more investors have been buying inexpensive homes that can be rented out. Those homes are, for the most part, out of the for-sale pool for the near-term.

Tri-County NJ Housing Inventories Down Only Temporarily?

Of these three reasons for Tri-County NJ housing inventories to be down, the first two would imply that the downturn in listings is artificial, and possibly temporary. But the role of investors in today's market could make the drop more lasting.

The NAR report also showed that the West was the only part of the country to see a year-over-year decline in sales during the month of March. The drop was almost solely concentrated around properties priced below $100,000, where sales were down 19 percent.

Are there any other reasons you can think of that would be causing Tri-County NJ housing inventories to be unusually low right now? We'd love to hear your comments.

Tax advantages of owning a Tri-County NJ home are probably not the number one motivating force behind buying a home. But the tax advantages associated with owning your own home are significant, and may be a factor in your decision to buy a home.

Mortgage Interest Deduction

If you itemize deductions you're generally able to deduct the interest you pay on debt resulting from a loan used to buy, build, or improve your principal residence, provided that the loan is secured by your Tri-County NJ home.

The ability to deduct mortgage interest also generally applies to second homes, though special rules apply if you rent the home out for part of the year. Interest you pay on up to $1 million in mortgage debt ($500,000 if you're married and file a separate federal income tax return) can qualify for the deduction (different rules may apply if you incurred the debt prior to October 14, 1987).

Interest on qualifying home equity debt of up to $100,000 ($50,000 for married individuals filing separately) is generally deductible regardless of how the loan proceeds are used. If you're subject to the alternative minimum tax (AMT), the AMT calculation doesn't allow a deduction for interest on debt that's not used to buy, build, or improve your Tri-County NJ home.

Qualified mortgage insurance premium payments made prior to 2012 can be deducted in the same manner as qualified mortgage interest, provided the mortgage insurance contract is issued after 2006. Congress is debating this tax deductible interest subject, and have been for several years. Each year, the possibility of this valuable deduction evaporating becomes more and more possible.

Could the mortgage interest deduction ultimately be eliminated? That seems unlikely, but elimination or reduction of the deduction has remained part of the ongoing debate, and was included among the recommendations contained in the National Commission on Fiscal Responsibility and Reform's December 2010 report.

Deduction for Property Taxes

If you itemize deductions, in most cases, you can deduct the real estate taxes you pay on your Tri-County NJ home in the year you pay them to the taxing authority. If you pay your real estate taxes through an escrow account, you can only deduct the real estate taxes actually paid by your lender from the escrow account during the year. For purposes of calculating the AMT, however, no deduction for state and local taxes, including any real estate tax, is allowed.

Capital Gains on Your Tri-County NJ Home

If you sell your Tri-County NJ home at a gain, you may be able to exclude some or all of the gain from federal income tax. For the most part, capital gain (or loss) on the sale of your principal residence equals the sale price of the home less your adjusted basis in the property. Your adjusted basis is the cost of the property (i.e., what you paid for it), plus amounts paid for capital improvements, less any depreciation and casualty losses claimed for tax purposes.

If you meet all requirements, you can exclude from federal income tax up to $250,000 ($500,000 if you're married and file a joint federal income tax return) of any capital gain that results from the sale of your Tri-County NJ home. This exclusion can be used only once every two years. To qualify for the exclusion, you must have owned and used the home as your principal residence for a total of two out of the five years before the sale. If you fail the two-out-of-five-year test, you might still be able to exclude part of your gain if your Tri-County NJ home sale is due to a change in place of employment, health reasons, or certain other unforeseen circumstances.

Special rules apply in a number of situations, including one in which you maintained a home office for tax purposes or otherwise used your home for business purposes. Special rules may also apply if you are a member of the uniformed services. Check with a tax professional about current laws that may affect the tax advantages of owning a Tri-County NJ home.

For more on current tax laws, visit the IRS website.

Buying a Tri-County NJ home presents a major choice right off the bat. Buy a new home, or one that has been previously owned? You may want to consider the following factors when making a decision on this all-important question.

Planning and Design Flexibility

Buying a Tri-County NJ home that hasn't been built yet provides a greater amount of flexibility and customization options. Buyers who purchase land and build a house from scratch have complete control over the planning, design and finishing of the home, which provides the greatest degree of flexibility and customization.

If you're buying a Tri-County NJ home sold by a builder or developer, depending on the stage of development, you may be able to choose from a variety of floor plans, exterior finishes, flooring options, paint colors, bathroom fixtures, kitchen appliances, and lighting fixtures.

Buyers of previously owned homes don't have this flexibility, since someone else made all the decisions as to what that particular home would have when it was built.

Buying a Tri-County NJ Home – Layout and Maintenance

Buyers frequently have a particular layout style in mind when looking for a home, whether it's a large, open floor plan, or a home with distinct and separate living spaces. Newer homes reflect current trends in layouts, including larger kitchen and dining areas, high ceilings, increased closet space and more bathrooms.

Older homes may suffer from functional obsolescence with outdated layout, design and style features. For example, many older homes lack the "flow" that modern homes have, making it difficult to get from one room to the next.

Many older homes may only have one bathroom, regardless of the number of bedrooms. However, the pro's of buying a pre-owned home is, the landscaping is mature, and you don't have to nurse and care for a new lawn, trees and shrubbery.

Those buying a new home often do so with the intention of avoiding time-consuming upkeep and costly repairs. New homes are usually free of the structural defects – such as leaky roofs and cracking foundations – common in older homes. But just because you're buying a new home, you still should have a home inspection done, just to make sure the builder didn't shortcut somewhere that you might not see without a professional who knows what to look for.

All homes require routine maintenance, but a new home should not require any major work for a number of years.

Older homes do require more time and attention, but many buyers feel the extra effort is worth it to be in a home with more charm than newer homes tend to offer.

Warranties When Buying a Tri-County NJ Home

Builders usually provide warranties on brand new homes, covering any defects in construction. Warranties vary, but most last up to 10 years for certain items. Warranties like this provide a great deal of peace of mind for new home buyers.

Many previously owned homes are also able to get home warranties that will cover certain repairs during the warranty period. Buyers should know, whether new or previously owned, home warranties are limited. They do not cover every defect that might occur in the home. Be sure to read the fine print of your warranty.

Selling a Tri-County NJ home? Sellers need to be aware, with real estate prices continuing to tread along the bottom, it's a tough time to sell.

It's even more important not to make some of these dumb mistakes when trying to sell your Tri-County NJ home.

These are just a few of the mistakes you could make when selling a Tri-County NJ home. If you'd like more home selling tips, we have those for you at this site under the "Home Selling Tips" category.

As always, if you have questions, please don't hesitate to contact us or post them using our comment form.

A Tri-County NJ mortgage is more difficult to get these days than ever, but there are some things home buyers tend to do that delay, or even kill a deal.

This seems to be especially true during the time after signing a contract, and waiting for the home to close.

6 Things To Never Do When Trying to Obtain a Tri-County NJ Mortgage

1. Don't make any large purchases like a new car or a bunch of new furniture for your newly purchased home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios. Higher ratios make for riskier loans, and sometimes qualified borrowers no longer qualify.
    
2. Don't apply for new credit. It doesn't matter whether it's a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgages, credit cards, autos, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
    
3. Don't deposit unusual cash into your bank accounts. By "unusual cash", we mean, cash you would not normally come into, like money your parents gave you to help with the down payment. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift is not. Discuss the proper way to track your assets with your loan officer.
    
4. Don't co-sign any loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios on your credit as well. Even if you swear you won't be making the payments, the lender will be counting the payment against you.
    
5. Don't change banks or bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Before you even transfer money between accounts, talk to your loan officer to make sure it won't affect your mortgage application.
    
6. Don't close any credit accounts. Many people erroneously believe that having less available credit makes them less risky and more approvable. Wrong! A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your FICO score.

The best advice we can give home buyers when applying for a Tri-County NJ mortgage is to fully disclose and discuss your plans with your loan officer or mortgage broker. The smallest little blip on your credit report could cause you to lose the house you're waiting to close on! Wait until after you've closed on your new home before doing anything that could adversely affect your credit score or credit report.