[Guest]

Hello. Don't know if what I'm looking for exists. I'm someone who rents, but hopes to own. Never having gone through this before, I'm not quite sure where to start. Does anyone have any advice regarding a non-biased source that can break down my financials and lay out my best options? As someone who has never been through this process, it seems like a broker will be too focused on making a sale vs. giving measured advice. Any thoughts?

[Guest]

I'm going through this right now in BoCoCa / Heights. You should do a lot of the work yourself up front to see how it works first so you know the right questions to ask and so you have realistic expectations.

What I'm saying is the norm and general, but there are always execeptions and is based on you having good credit. Banks will generally lend you all you can take so that your monthly debt doesn't exceed 46% of your income (housing, auto, ccards, student loans, alimony, child support). So you make 120,000 a year, all debt can't exceed 4600 monthly. Great is you want to buy a condo. Or a house outside NYC.

Most of the stock in BoCoCa (or NYC in general) is co-ops. Co-ops place restrictions on what you can do with your place in terms of renovations and subleasing, etc. You're not actually buying property with a co-op but shares in a corporation. The board of that corporation also wants to make sure that you can contribute to your maintenance. So, that being said, a co-op generally squeezes that ratio down to 30-35 percent. So, making 120K, all monthly debt can't exceed 3000. With no debt besides housing, that'll get you a 475,000 place (average 1 bed co-op in BoCoCa / Heights) with 600 maintenance.

You also need 20% down for co-ops. And a co-op is going to want to see at least one year in mortgage and maintenance left over in cash after closing. So for that 475,000 place you need 95K in cash for downpayment and another 36,000 for one year housing. Add in one year of your non-housing debt payments, if you have any, in cash to make sure you can get past the board. So your looking at a minimum of 130,000 cash to close. (By Cash I just mean liquid - not real estate or other wierd assets)

Condo doesn't have the same restrictions on debt to income, but are at least $100,000 more expensive for that same reason. And you get hit with NYS/NYC taxes with a condo, so you need to layout more at closing than your 20% (Condo's might be lower percentage wise though).

Some suggestions - Get your financial house in order. Figure out exactly what you make a year (with investments), exactly what your debt is (pay it down if you can, but not at expense of large liquid nut) and use 30 percent of your monthly debt as a baseline for your housing payment if you're looking at co-ops. Look at the NY Times property listings, streeteasy.com, brownstoner.com and find some financial calucaltors (pemc.com has some good ones), and figure out what your monthly nut can be for housing. Then, go to open houses in your range to see whats out there and talk to brokers and find one that youre comfortable with and talk to them or walk down Court St and into the myriad of brokers and ask to speak to someone. Or ask friends. I've had some good expereince with BHS, Elliman and Corcoran brokers in the Heights, as well as some of the smaller shops on Court. There are also some real wierdos out there that I can't belive sell anything to anybody. Its all about getting comfortable. Sure, a broker will make money off of the sale (why do it otherwise) but they can also be really helpful so don't be too apprehensive. If your looking at co-ops, they can't just sell the place to you b/c they need to be intimate with your financials to get you past a board. My adivce is to get your own broker. The listing brokers duty is to the seller. You may want a buyer broker to represent your interests (then the 2 just split the 6% commission that the seller pays).

Hope this helps.

[Clinton Hill]

The previous post is an excellent one! Great advice, very informative.

I would just add that some of the numbers you mentioned regarding co-ops will depend on the price-range of your prospective building, particularly on the lower scale. Some co-ops (Willoughby Walk in Clinton Hill is my example) only require 10% down, as opposed to 20%. And, while all co-ops will like to see money in the bank, not all will require a full year's worth of mortgage and maint. I suspect that is also a feature of mid-to-high market pads. I just did not want you to think that only people making 150k and up can buy a place - it is harder for (us) little people, but it can be done!

And you are right to do research other than asking an agent - most of them will only care about the sale, not your financial well-being.

There are some tools online that you can access to perhaps answer some of your financial questions. When I was looking, http://www.mortgage-calc.com/ was a useful site for me.

I hope this is helpful. Good luck!

[Guest]

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