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September 17, 2009
First-time Home Buyer
Hi everyone,
Recently married, my wife and I are investigating the possibility of buying a condo in Brooklyn (Cobble Hill, Carroll Gardens, Park Slope, Brooklyn Heights). Here are our financials:
Annual HHI: $162K
Monthly debt: $0
Liquid assets: $40K
Non-liquid investments: $60K
We'd like to spend somewhere between $350K - $450K with $20-25K down, which equates to an approximate down payment of 5%. Does anyone have any insight as to whether this is feasible considering the current economic climate? We've crunched the numbers and we can comfortably afford the monthly mortgage/maintenance/taxes, etc. I suppose it's a matter of getting mortgage approval with only 5% down.
Much appreciated.
Comments
An FHA loan. I don't know the details other than 3-5% dp
Posted by: daveinbedstuy at September 17, 2009 4:06 PM
I think your only solution is an FHA loan. The building has to be FHA approved. Co-ops and older condos are not but a lot of the new condo constructions are. On the downside, sponsor units in new constructions have very high closing costs due to transfer taxes (figure 20K to 25K on the price range you mentioned). FHA loans do not allow seller's concessions so you have to pay the above out of pocket yourself.
I am not an expert, so please someone in the know chime in.
Posted by: kdabrowski at September 17, 2009 4:17 PM
FHA allows concession up to 6% of the price
Posted by: goat at September 17, 2009 4:58 PM
I don't believe there is a single FHA-approved condo building in any of those neighborhoods -- most of those that have obtained FHA approval are in Downtown/Fort Greene/Clinton Hill/Bed Stuy area -- places where they need to sell apartments. The few condo construction projects in your neighborhoods of choice are either too small for FHA approval or have no problems selling out (witness the Novo's recent sellout). There have been many discussions on Brownstoner regarding various buildings that are FHA approved, including the Belltel Lofts in Downtown. Check out some of these projects -- you may be very pleasantly surprised. Good luck.
Posted by: babs at September 17, 2009 6:20 PM
Don't even think of buying -- you will have no cash cushion. Rent and save.
Posted by: BH76 at September 17, 2009 7:11 PM
There is a state program for first time homebuyers called SONYMA, and unlike FHA loans, the building doesn't have to be "approved" or whatever. If you qualify, you can get either a 30 or 40 year fixed mortgage with 3, 5, or 10% down. Your income might be too high though.
I'm in the process of trying to close a deal with one of these loans after I was unable to get a normal mortgage with 10% down.
Posted by: FalulahBaker at September 17, 2009 10:47 PM
Just wanted to add, before you begin your search you'll want to get "pre-qualified" from a bank or mortgage broker. It doesn't cost you anything, so why not make a few calls and get a professional opinion ? You'll have a better idea as far as how much you'll be able to borrow, then you can really determine your price range accurately. Additionally, RE agents will be more inclined to help you once you have the pre-qual.
Posted by: FalulahBaker at September 17, 2009 11:07 PM
Get pre-approved for an FHA loan. The minimum DP is 3.5% and they allow up to a 6% sellers concession which will cover your closing costs. Minimum MIDDLE credit score is 620. When you are ready to start looking, you must tell your agent because a lot of condo buildings have minimum DP requirements of 10% and you don't want to waste their time or yours.
Good luck.
Posted by: bedstuytownhouse at September 18, 2009 1:39 PM
Check out SonyMa for low down payment loans. I just bought myself a 1 bedroom Co-op, and my income was too high for SonyMa so I had to put down 20%. If you can get a loan with less than 20% down, you will up paying PMI insurance, which is just more money per month. You can talk to my mortgage broker who is with Bank of America, but was president of the Mortgage Brokers Assoc. of New York.
Don Romano - 516-647-3287. He was very helpful to me, but works for a bank so might not know everything about SonyMa. Check the website for Government loans for that.
Good luck. I just bought, and it was a long, hard hard process. And very confusing for a first time home buyer. My advise is, get a great RE lawyer! They can really make or break the process. My RE broker was FABULOUS, and was exceptionally helpful. He more than earned his commission.
Posted by: Fulltwist at September 21, 2009 5:48 PM
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