Long Beach Island NJ (LBI NJ) Real Estate Market and the Benefits of a 20% Down Payment (or more)
LBI Real Estate Market 20% Down Payments 
LBI Real Estate Market 20% Down Payments 
LBI Real Estate Market 20% Down Payments
Long Beach Island Real Estate
When looking to buy a home in the Long Beach Island real estate market often times a mortgage will be involved. While it is true that many purchases are cash transactions, especially in the higher price points, understanding financing options is a key step to shopping for a Long Beach Island home. Since the LBI real estate market is primarily a second home market, loans of less than 20% were non-existent until recently. In the past year or so, we have been seeing more and more low down payment loans, some as little as 5% or 10% down. To that end, buyers should understand the advantages of LBI Real Estate Market 20% Down Payments and how they can impact the ownership cost of a home.
By : Nathan Colmer | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com
Click here to search all homes for sale in the Long Beach Island NJ real estate market
LBI Real Estate Market 20% Down Payments
While every buyer’s personal situation will vary, and therefore any loan questions should be addressed by a lender, there are a few advantages to putting at least 20% down on the purchase of a home on Long Beach Island. They are:
- You will pay less for the home: Interest is calculated on the principal balance of the loan. The more you put down, the lower this balance will be. As such, the higher the balance, the more interest you will pay costing you more money. Additionally, low downpayment loans usually carry a higher interest rate which will only compound this problem for the length of the loan.
- You offer will most likely be better received: Since the LBI real estate market is highly competitive, offers that are “out of the norm” can be less well received by a seller. In a market of mostly cash offer or high down payments, a rather unconventional offer of less than 20% down could cause a seller to pick another offer over yours. This is not to infer that all low down payment loans are ignored, just that you will be in a stronger negotiating position with a more conventional offer.
- Most low down payment loans carry Private Mortgage Insurance (PMI): PMI is an insurance policy for loans that have less than 20% equity. In order to reach that equity position you have to either pay down more of the loan or the property has to increase and be re-appraised.
- A higher down payment lessens the chance of a short sale: While short sales are very uncommon in the LBI real estate market, they do occur from time to time. In order for a short sale to be triggered a house has to sell for less than the amount owed on the loan. With a lower down payment this is more likely in the event the market fell and you needed to sell.
Buying a Home in the LBI NJ Real Estate Market
Buying a home is a major investment and one that should be carefully evaluated. While most buyers want the “best” house they can afford, the financial cost of owning a home on Long Beach Island cannot be ignored. I always advise against over-reaching for a home on LBI and sometimes a smaller, more affordable home can be the better beach house. I can go over the ownership cost of homes in different price points and help you develop a budget to find the right house that fits your needs and budget. If you have any questions about buying, selling or investing in the LBI real estate market please do not hesitate to contact me.
By : Nathan Colmer |LBI Real Estate Agent | The Van Dyk Group
Cell: 609-290-4293 | Office: 800-222-0131 | ncolmer@vandykgroup.com
Click here to search all homes for sale in the Long Beach Island NJ real estate market
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