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February 19, 2008
Newbie Homebuyers Face New Challenges
It’s the best and worst of times for New Yorkers looking to invest in their first homes, according to the cover story in Sunday’s real estate section of the Times. On the one hand, there’s less competition for properties, prices aren’t skyrocketing, and mortgage rates are low. On the other hand, lenders are wary of giving mortgages to would-be borrowers with less than stellar credit (700 is the magic credit history number; any lower than that, and lenders aren’t going to be falling all over themselves to issue a loan). As a result, some first-time buyers are getting creative. One buyer in Clinton Hill, for example, probably wouldn’t have gotten banks to approve his purchase of a $427,500 condo since his credit score was less than 700 and he only had $20,000 saved for a down payment. HSBC gave him a loan, however, because it has a program for ZIP codes with large minority populations and the buyer’s income was high enough to cover monthly mortgage payments. Another couple profiled in the article had their closing delayed despite the fact that they had good credit because their lender wanted them to take an online course about their mortgage (what a drag!). Any readers having troubles securing their first home loans?
Jitters for First-Time Homebuyers [NY Times]
Photo by bonddidwhat.
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Comments
I read that article and thought, no wonder we're in a mess.
Am I the last sucker around who actually saved up my 20% down payment AND renovation money AND extra 6mo-1yr padding in case I lost my job/lost a leg/lost my mind? And did this before I went off apartment hunting?
Posted by: guest at February 19, 2008 10:52 AM
No. But thanks to a tip from my neighbor, i called a broker from HSBC last week, and she offered me a 30-yr fixed re-fi at 5.25%, after my guy at Citi told me the best he could do was 5.875%. The lower rate was because of my address on the CH/BS border.
Posted by: guest at February 19, 2008 10:54 AM
I've been going on and on about the HSBC Community Works program for about 2 years now. I got my conforming 30yr fixed rate mortgage in '05 for 4.875% when regular rates were @ 5.75. Anywhere in Bed-Stuy or the CH/BS border will qualify. It's a program that is targeted to lesser developed neighborhoods with the intent of attracting quality home/business owners.
http://www.us.hsbc.com/1/2/3/personal/home-loans/mortgage/mortgage-rates/nat-rates
Check the rates today vs. conforming rates.
They also have a good package renovations loan. I didn't find out about that until after I closed.... but it worked out better for me since I saved enough to do it with cash. ( but it sure did hurt)
Posted by: PutnamStoner at February 19, 2008 11:06 AM
I just lost out on buying a condo because the bank's appraisal came in under the sale price...in fact, two of the three comp properties listed in the report had adjusted prices way below the actual sale price too. In a situation like this, either the seller has to drop the price to match the appraisal or the buyer has to pony up cash to match the difference in price. No-win for me. I think this may be the latest manifestation of the poor market - banks are hesitant to finance properties that may lose value in the future. Anyone else hear of this happening?
Posted by: guest at February 19, 2008 11:07 AM
And NO, I'm not a broker. Just would love to see some more conscious family oriented families come on over to the Stuy!
Posted by: PutnamStoner at February 19, 2008 11:08 AM
I don't think it is a bad idea for first time home/condo buyers, to take some kind of course. There is much to much hearsay, misinformation, small print and possible fraud out there. I also think some kind of course for refi/HELOCs is necessary, especially for older folks who have been out of the loop. These are the people getting defrauded and in over their heads, in part because so much has changed in the real estate industry since they signed their original mortgages.
Yeah, it's an annoying pain to have to sit through this often boring stuff, and it may delay your deal a few days, but it's like going to the dentist, better a little pain now, than a whole world of hurting later.
Posted by: Montrose Morris at February 19, 2008 11:24 AM
I thought it was really funny how the article stated that now was a good time to buy because there is no more fast appreciation! Hah! So, now that the upside is limited, time to dive in! Talk to a broker, and you will never hear it is a bad time to buy.
Posted by: guest at February 19, 2008 11:27 AM
I went to look at an apartment this weekend and I was talking to the broker, telling them that we were looking to buy a year ago, but I had the foresight to wait thinking that prices will go down.
He (broker) said that prices haven't gone down.
Are brokers that delussional?
Posted by: guest at February 19, 2008 11:31 AM
Well some prices haven't gone down, so depending on what area he's talking about he may be right. Prices seem to have leveled off a bit and appreciation has definitely slowed, but in prime areas I haven't yet seen prices going down on the whole.
Posted by: guest at February 19, 2008 11:38 AM
11:31 - I know 5 different couples who have sold 2 to 3 bedroom apartments over the past 6 months.
ALL got their asking price.
ALL asked for a price higher than the valuation from last year.
ALL were in contract within 2 months of first listing.
ALL were prime Brooklyn properties - BK, BH, CH etc.
Prices really havent gone down for most properties.
Posted by: guest at February 19, 2008 11:39 AM
In the current market 6 months ago might as well be 6 years ago. The crumbling of NYC markets is happening daily as we speak. Comps from 2 months ago are no-longer viable. Brokers I know are talking comps in terms of 2 weeks, not 2 months. And remember a comp is not a comparable listing, but a comparable SALE. Just because 50 people have listings overpriced does not make them comps. Its the closed sale that makes a comp, and those are falling all over the city. Any Broker stating otherwise is trying to make a sale.
Posted by: guest at February 19, 2008 11:48 AM
I am the 11:39 poster. I am not a broker.
I said in the past 6 months - meaning a few of them have sold in the past month.
NYC Real estate does not drop as rapidly as you would like to think.
Keep on hoping prices are tanking and you will miss another opportunity to buy.
Prices will be up at leat 10% year to year by late Spring.
Posted by: guest at February 19, 2008 11:58 AM
prices are up from a year ago.
Posted by: guest at February 19, 2008 12:01 PM
Depends on where you are. Prices in Williamsburg are down significantly from last year. Last year I looked at a 3 family for 1.5 ML when comps were similar, but the owner pulled it. Its now back on for 1.075 ml and I'm seriously looking at it at the new price, although not sure it would appraise anymore with appraisals being tight.
Posted by: guest at February 19, 2008 12:05 PM
11:58 = fool
12:01 = liar.
Posted by: guest at February 19, 2008 12:21 PM
11:58 - do you even read newspapers, WSJ, NYT, anything? You are delusional if you think the market is not coming down. Believe me, NYC prices can come down fast. Ask HUNDREDS of real estate developers who lost all their money in the 80s crash.
Posted by: guest at February 19, 2008 12:23 PM
how do people find it so hard to save money for a down payment?
its not just here. I sometimes watch "My First Place" on cable, and all these people around the age of 30 have little savings and trying to buy with no money down.
WTF?
Posted by: guest at February 19, 2008 12:23 PM
Well lets see. 20% downpayment on a cheap 600,000 apartment is $120,000, plus closing costs = another $10K. Simple. I think I bring that home in a couple weeks. Doesn't everyone?
Posted by: guest at February 19, 2008 12:26 PM
11:58 made millions in RE. How about you?
Posted by: guest at February 19, 2008 12:34 PM
It costs alot to live in NYC. We just did our year end finances and I was shocked to realize how much we spend on the neccessities.
-Rent
-Elec
-Gas
-Telephone
-Cell Phone
-Health Insurance (we pay our own)
-Food
-Transportation
-Car Payements(yes, we have one)
-Car insurance
-Gas
-IRA Contributions
And we're at a grand total of almost $5000 a month.
We're slowly saving for a home, but at the rate we're going, I think a Co-op will probably be the answer for us.
Posted by: guest at February 19, 2008 12:50 PM
12:26 is low on closing costs. 4% for resale, 6% on new. i just walked from an offer on new construction b/c i didn't realize that, and the upfront cash i would have to piss away was just too much for me to stomach. btw, i had 10% down, but will not try again until i have 20% + another 50-60k in the bank above that for closing costs and pad. new construction is for the financially inept. i will pick up anyone underwater on one though. also, i called many banks and the terms for anything less than 20% down are getting very unfavorable by the day. this does not bode well for 08 prices. there will be no support from the marginal buyer.
Posted by: guest at February 19, 2008 12:50 PM
12:50 (first one) - move to queens for a couple of years and save the difference. rent has to be the biggest chunk of that...
Posted by: guest at February 19, 2008 1:04 PM
i'M 12:50 (FIRST ONE)
my rent is 1,600 for a 2-bedroom, which I think is a great price. I'm just saying everything adds up. This city is expensive even if your rent is not that high.
Posted by: guest at February 19, 2008 1:19 PM
then you must be double paying on gas ;-)
Posted by: guest at February 19, 2008 1:26 PM
PutnamStoner - do you have to be a first time buyer? I'm thinking about refinancing from 7.25%... wondering if it's worth it to pay those closing costs agin after only a year and half....
Posted by: guest at February 19, 2008 2:40 PM
if your "nut" is 5k and you can't save, lower the nut.
and yes, prices are up from last year.
Posted by: guest at February 19, 2008 2:53 PM
prices are NOT up in all of NYC.
We looked at a house last year, and a comprable house is on the market for the same price.
Prices are leveling off and dipping a little bit in some nabes.
Posted by: guest at February 19, 2008 3:07 PM
12:50, Might you consider giving up your car and phone? I know that giving up a vehicle is hard to do but if you don't have a car payment, car insurance or upkeep (gas and maintenance) for your car, you might save about 500-600 monthly. Use your cell phone as your home phone, that might save an additional 60. Get rid of cable which was another 75 monthly. Don't use a flatscreen HDTV they use more electricity than older models and use AC sparingly. I did all of the above and I also got a second job. I know everybody's situation is different but it was worth the temporary sacrifice to purchase my own home.
Posted by: guest at February 19, 2008 4:23 PM
If you buy a Condo now, you are making the biggest mistake of your finical life! I'm not going to go into the metrics but, How much would your Condo would rent for??
The What
Someday this war is gonna end...
Posted by: guest at February 19, 2008 4:40 PM
anec-data of a house you looked last year vs today is not really actual data.
every avg AND median price is up LTM (year/year). that's co-ops, condo and townhomes. I don't know about next year, but there is historical data out there.
Posted by: guest at February 19, 2008 5:04 PM
Has any first time home buyers on here tried to get a loan? Can you still do 5% down?
Posted by: guest at February 19, 2008 5:43 PM
4:40 = The What on meds.
Posted by: guest at February 19, 2008 5:50 PM
Actually, 4:23, LCD televisions use much less electricity than a similar CRT screen or Plasma.
In fact, over 3 years, the energy savings will likely pay for the cost differential.
There is a reason smart companies are trashing their CRT monitors for LCDs. It isn't just for the sharper text.
Posted by: Polemicist at February 19, 2008 5:52 PM
I know a regional manager for WaMu who had trouble getting a mortgage with them. Fed up, he went elsewhere and closed. Gets worse everyday. Why would you buy in this market when you know you'll save if you wait?
Posted by: guest at February 19, 2008 11:08 PM
I just bought a place and got a mortgage with only 5% down. My rate is 5.6%
The place was under 300K
It's charming and beautiful and I love it.. It is a block away from the exact subway stop I wanted to live by. I made this decision impulsively after realizing that I would be in New York for several years to come and I can not handle another shit landlord, or another roommate or another disastrous apartment search. So now.. we'll see!!
Posted by: guest at February 20, 2008 12:35 AM
Avoiding a "shit landlord, or another roommate or another disastrous apartment search" is worth 150K? That's the likely 'fat' that will be trimmed off your appraisal as this market gets mauled unless your comps were already 600K or so. You'll never get that back. Biggest housing boom/bust ever. To each his/her own.
Posted by: guest at February 20, 2008 9:30 AM
Hell ya it's worth it! This is my peace of mind we're talking about here. I plan to live someday as if a few hundred thousand dollars won't make or break me anyway. Life is about making decisions.
Posted by: guest at February 20, 2008 7:01 PM
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