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First time home buyer - need advice

407 18 July 22, 2018 at 08:30 AM
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I live in NYC and I'm trying to buy my first home. I don't have anything saved up, and have been renting for the past 20+ years. I have excellent credit (780+) and decent income ($80k). I don't owe anything, besides my monthly credit card bill ($2k) which I pay off in full every month.

I am trying to get the best bang for my buck, and need advice between getting a condo or coop.

I've looked at a few co-ops and they have this board approval process where they want you to have 20-50% down payment if you're taking out a mortgage.

Condos on the other hand have no board approval process, and you can buy them as long as you have the money.

I was hoping to get some guidance on what to do, how to get the best rates for a mortgage, and what are some programs I can qualify for a first time home buyer.

Thank you all for help and advice Smilie

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Joined Mar 2006
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#2
The fact that you don't have anything saved up means that you're not ready to buy anything. Save at least 10% for a down payment (preferably 20%) and then start thinking about buying something.
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#3
I wouldn't buy anything until the next down turn, 2-5 yrs... I waited and bought a $500k house for $220k off the bank cause someone lost it buying at a time like this.
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#4
Quote from vairox
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I wouldn't buy anything until the next down turn, 2-5 yrs... I waited and bought a $500k house for $220k off the bank cause someone lost it buying at a time like this.
Agreed. OP's post above is basically the perfect storm of bad decisions. No saving, extremely high cost of living area, and an inflated house market. Dude, you're getting yourself up for failure.
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#5
I would get your credit card bill down and save 1k a month for deposit,can you ask family member for deposit,what prices are you looking at.condos cost 40% more than coops,coop will need 25% down

https://www.doughroller.net/mortg...-i-afford/
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#6
You will most likely need a down payment of at least 20% to get any regular mortgage approval and avoid PMI, so some coop board requiring that is not unusual or excessive imo. If you do not have 20% to put down, then you should not be buying the property imo.

As to condo vs. coop boards, imo they both suck, but that is me. You have to play by their rules and as such have to put up with their shit. Some are better than others obviously. It depends on your budget, but unless you love paying high taxes and getting little for it, moving to the suburbs might be a better option for you.
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Let Sleeping Dogs Lie
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#7
you need a down payment as well as a lot of extra money to cover things like a year of insurance and other fees you will have when you buy. Do the smart thing and move in with someone who will charge you very little or no rent and save save save. If you don't have at least 20% down you will need to pay PMI insurance which is money down a hole.

Don't forget you will have HOA fees and will need to do "due diligence" on the health of the building. You will need to determine how old the building is as well as anything that is provided, such as heat, water and the elevator if the building has one. Friends in Denver purchased a condo and they just had a 15K assessment to pay for the heating plant to be replaced along with all the water lines.

You will also need to cover any small repair costs that come up.
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#8
Quote from phillint
:
I would get your credit card bill down.....
Solid advice but in this case it already is being paid off every month so getting it lower isn't all that advantageous.

Agree with everyone saying buying with no money saved is asking for trouble. Not just for down payment but for any unexpected expenses that may pop up right away.
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I like what she said, not what it means.

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#9
Bought my house FHA 3% down
no money in the bank
more bills than i wanted to have.

been here almost 20 years. refinanced 2 times. seems i still have the same bills

living in reality
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for those that hate spelling mistakes www.walmarts.comCool

bulb save money by checking your insurance every 2 years (and not every 20) Thanks Liberty Mutual for reminding me to shop. The $842 increase this year sums it up. Across the board increase for Ohio....whatever
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#10
I'm on the same boat, except I have $ saved up.
I'm not originally from NY. Been living here for about 3.5 years.
Everything is expensive. Parking sucks, traffic sucks.

I'm actually riding the job out, hoping they will move. Company building lease is up in 2023.
Hoping they'll move to Orlando, then I'll be set.

If you have nothing saved up, it's going to be tough to buy a condo or coop, depending on cost. Coop fees vary and condos go for around 500k. I've looked at both, both are bad imo.

The only good thing is that if housing market crashes, it won't go down much for NYC, as there's always demand. Have you thought of buying and renting a room or floor out while living in it? That was one of my options, but the 2 family homes I was looking at go for 800k+

^ also tough finding good tenants. With shit laws protecting them in NY. people can live for 6+ months without paying rent and nothing you can do, but wait for court process. Lots for bad people in NY
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#11
Quote from vairox
:
I wouldn't buy anything until the next down turn, 2-5 yrs... I waited and bought a $500k house for $220k off the bank cause someone lost it buying at a time like this.
Quote from cccheel
:
Agreed. OP's post above is basically the perfect storm of bad decisions. No saving, extremely high cost of living area, and an inflated house market. Dude, you're getting yourself up for failure.
I second this. Save up your money and wait.

Recent reports show that housing price has peaked, and number of home sales have declined. Places like SF and LA started to have offers being accepted at below listing price, which is unheard of until a few months ago. People used to pay above asking price with all CASH in a day or two of listing.

That signals that the market price has peaked.

With rising interest rates, price is only going to go down. On the top of that, we have trade war looming above our heads.
I bet in 2 years the economy is going to be in recession, and housing bubble will likely to burst.

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#12
I am a loan officer, NMLS/MLO 1097859

Based on what you said I can offer a few reccomendations:

Don't have anything saved up? Do you have a 401k or a retirement fund? 50% vestment loans for home purchase could be an option.

If you have FICO's of 780 or above there is not much else you can do to get a better rate. Increasing the down payment will not get you a better rate, in fact, it could be the same rate, but worse on price (discount points).

- But the payment would be better and you would qualify for more because if you can get to 10% with a 740 FICO (DTI limit of 43) you could get an 80/10/10 - 10% Down, 10% on semi-variable , 80% fixed loan fully amortized.

@Cccheel - 20% is ideal
The benefit of having 10% on a semi variable, means you can attack the payoff of the 10% while avoiding PMI. PMI is only subject to the 1st loan being at 80% or below. This could save on refinance costs later.

Co-Ops are not allowed for FHA, and they must be specially accepted projects to "sell" to FNMA, as in, fat chance, not going to happen. For this reason the entry point is so high 30%-50% down payment on Co-Op, because they are quasi-collateralized/personal loans.

Condo's - Must be on HUD List of approved condo's or expect the Loan Officer to have his game face on and get the entire project, not just the unit approved with HUD ( expect 3-5 weeks just to clear HUD)... so find a property on HUD's list if you are doing FHA.

Condo's for Conventional Loans are per loan approvals- I will save the guidelines on this as this is already too long.

@phillint
- I would recommend with a 780 FICO to only get you card down to 30% of whatever the High Limit is and maintain it. Stack as much capital as you can for Down Payment/Closing Costs.

@stufine - Thank you.


There are alot of figures thrown around and alot of 20%, don't buy, down turn... alot of beautiful talk but as Stufine said, get to reality.

I will continue in the next post some guidance and food for thought.
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#13
Since the previous recession, all of the mortgages have been "originated", that's the word we use in the industry for a loan being closed, these loans have undergone an intense scrutiny.

It is not easy to buy a home, you have to have your financial house in order and the underwriter must complete ATR or ability to repay forms and also comply with HPML/QM standards after 2009. That is a loan must be "Qualified Mortgage" and the loan has extra layers of risk if it is deemed High Priced Mortgage Loan (HPML). If one of these loans is closed and the client sues the mortgage company, if these forms are not properly completed the recourse is a 100% repurchase plus a penalty in which the buyer is able to recover any expenses.

The algorithms in place that give "automated" approval are industry standard, in truth, only FHA loans receive manual underwriting where the Underwriters Discretion may operate in a grey area outside of these algorithms.

Mortgage companies only want to close on loans if the automated systems that are integrated with credit, and now income (Day 1 certainty), approve the loan application. This helps mitigate risk.

The reason for this post, is a belief that the economic down turn to come could provide a window to buy, it could be a while because the economy is proving to be stronger than we anticipated (I thought we would already have a strong correction... still waiting)

Consider the following:
Loans that have not been used to purchase homes as a primary residence 2007 - PRESENT


NINA - No Income No Asset loan... Literally there is no documentation to prove these items... just show up at TITLE and sign, and pay.
SISA -Stated Income Stated Asset ... You literally tell the lender, well don't look at my taxes or ask me for my paystubs, but trust me I make $xxxxx month, $xxxxx in my account... Ok, show me 3 months of bank statements, and CLOSE
INTEREST ONLY - Cant afford to pay principal payment? No biggie, just pay the interest on the property and the tax/insurance
NEG AM - Can't even afford to make the Interest Payment? No Biggie, just pay partial interest and maybe some of the property tax/insurance, whatever the short fall is we will add it back on top of the loan balance. (Usually for High End clients)
3/1 ARM - Qualified on the 1st payment of an adjustable rate. Regardless of the worst case scenario when the ARM adjustable rate mortgage readjusts...
Balloon Payments- Sure you dont qualify at all, but hey, take a super low balloon payment and later 3-5-7 years later pay it ALL off at once (dont worry you'll be able to refinance)



I have to go back to work... there are a few others, 90/5/5, Mortgage Wraps, Inventa-Renter....

Since home purchases have been originated using loan products that are actually measuring the clients ability to repay... or else risk a complete recourse of repurchase... Statue of Limitation - LIFE OF LOAN!
I strongly believe when the correction sets in (down turn) it will be limited and more probable that housing may drop 5% or 10% at the most if that, the most probable outcome is a long period of stagnation or flat and no growth (loss vs. inflation)
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#14
Programs that may help:
HOUSING FINANCE AGENCY

HFA's - 5% Grant - Live in the house for 3 years and the "promissary note" is forgiven - no repayment needed for the 5% assistance

HFA's - 7%-7.5% Repayable 2nd and 3rd liens - You make no payments for 30 years , at the end of 30 years you make the payment on the 2nd and 3rd loans in full.ien

CHENOA fund - Basically - You borrow the money for down payment - 3-5% allowed

All of these programs have a maximum DTI restriction of 45% and 660 FICO score mininum typically. Home buyers ED + 30 min meeting with Financial conselour is mandatory prior to closing.


Freddie mac Home Possible 3% down - This has a lower PMI factor than regular conventional loans. With High Fico's this is absolute best option if you can gather 3% down payment (less than FHA)
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#15
Bottom line: don't borrow money from your retirement savings before retirement. That is a really stupid suggestion that has high chance to ruin your retirement.

https://www.investopedia.com/arti...ns401k.asp

Borrowing from your 401k was Diegomayra's first idea. If you ever care about your financial well-being, quit listening to people that lend others money for a living.

The fact that you have been renting for the past 20+ years and had nothing saved up means you are living paycheck to paycheck.

You are walking on the edge close to being broke. It is also a terrible timing to have the house fever when housing price is high.

Me on the other hand, I rent cheaply and lived like a college student for the past 5 years since I started working. Not counting my maxed retirement contributions and investment, I now have enough money in my taxable portfolio to buy a single family house at the median price in my area with 1yr + emergency fund spare.

If you don't have any projected income increase or anything saved, why do you think you are able to increase your expense by purchasing a home and not get screwed down the road? It's all about math and decision making skills.
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