Can Your Job Give You a Discount?

Can you get special assistance or qualify for a low-cost mortgage New Jersey based on the type of job you have? Does working as a teacher, nurse, police officer, firefighter or other career in public service let you qualify for special mortgage programs not available to other borrowers?

Well yes – and no. In reality, there are almost no mortgage programs specifically targeted at certain professions that aren’t available to the general public. But that’s not to say there aren’t any – or that there aren’t certain advantages that teachers, cops and other have when shopping for a mortgage.

A search on the Internet will easily turn up tons of special mortgage offers targeted at these professions. Searching for “mortgages for teachers” or “mortgages for nurses” will turn up page after page of mortgage promotions directed at these professions.

Stable employment = good loan risk

However, almost none of these are actually special mortgage programs New Jersey designed for those professions. Instead, teachers, nurses, firefighter, police, professors, state employees and others in institutional careers share certain characteristics that make them attractive customers for mortgage companies – so many of them design special appeals aimed at people in those jobs.

What those careers share are stable employment prospects and income. Unlike salespeople, factory workers, managers or others in the private sector, people in institutional jobs tend to be at very low risk of being laid off or fired – and often stay with the same employer for many years. Their incomes tend to be stable as well, unlike, for example, a salesperson or small business owner.

All this makes them very safe candidates for a mortgage loan New Jersey. And that’s what can enable you to get attractive terms on a mortgage, rather than a special program aimed at your profession.

HUD Good Neighbor Program

One major exception to this rule is HUD’s (U.S. Department of Housing and Urban Development) Good Neighbor Next Door Program. This program does offer huge discounts for K-12 teachers, law enforcement personnel, firefighters and emergency medical technicians who purchase HUD properties in specific areas.

The incentives are considerable. The program allows you to purchase a home at 50 percent off the appraised value with only a $100 down payment. The catch is that the property has to be a foreclosed home reclaimed by HUD and located in a “designated revitalization area.” These areas tend to be less desirable than other areas, with elevated rates of vacant properties and crime, but are considered potentially attractive to young people looking for areas that may rebound.

Should You Pay Cash for Your Home?

If you could pay for your next home with cash, why wouldn't you? This could be one of the nicest problems that you'll ever have.

Most homeowners spend decades paying down their mortgage loans. When it's all said and done and the last payment is complete, most people pop a bottle and celebrate. Why in the world, then, would you ever take on a mortgage loan if you actually have the money to buy a house in cold, hard cash?

The traditional answer is that you could put that money to better use. Let's say you have a 6 percent interest rate on your mortgage loan, and you fall ino the 33 percent tax bracket. After deducting mortgage interest from your taxes, you'll end up with an effective 4 percent interest rate. If that's readily available in the market through certificates of deposit (CDs) or money market accounts, you could have a higher return on your money.

Here's how it works: You'd take the loan money and invest it into a 5 percent savings account for a tiny (but welcome) 1 percent return on your investment, or into stocks for an even greater return if your risk tolerance is higher. That's the magic of offsetting interest payments with investment returns.

An all-cash home payment ties up your assets in a very real way. If you need a sudden burst of money for medical bills, a dream vacation, or to pay for college tuition, it won't be readily available. In a tight mortgage market, like the one we're currently experiencing, you might not be able to draw equity out of your home as quickly and easily as you need to. If you had a mortgage payment instead, with the money parked in more accessible investment vehicles, you could easily pay those unexpected bills.

There are financial pros and cons in the all-cash strategy. But don't forget about the emotional impact. Owning your home free and clear is worth a little celebration whether you paid down the mortgage or bought it outright. It offers a peace of mind that no loan can ever match. In the end, that may be enough to outweigh the slim financial rewards of reinvesting the loan balance. That house is yours, and no bank can ever take it away.