Home Buying in 11211>Question Details

Derek Weber, Home Buyer in Brooklyn, NY

I have $90,000 saved. I live in NYC and my current rent is $800/month. Should I buy a condo in Brooklyn or Queens or continue to rent? Thanks!

Asked by Derek Weber, Brooklyn, NY Mon Jan 16, 2012

Help the community by answering this question:


Dear Derek:

The best way to accumulate wealth in the United States is still home ownership, especially if it is your primary residence. This is because when you factor in the tax advantages of home ownership, it is often cheaper than renting. Also, unlike renting, when you own a property, you monthly payment never goes up as rent would over time! When you own a house it is a low risk investment (relatively speaking) and hopefully over time the value of your property will go up!! Historically over the long haul it always has (although nobody can predict the future with 100% accuracy ;)). Your question is a very personal one and only you can decide the answer.

Having said that, here is some food for thought.....

1) If you purchase a condo for $400,000.00 and put 20% down, your monthly mortgage payment would be about $1,575.00 (this is assuming you are a qualified buyer taking a 30 year fixed mortgage with an interest rate of 4.25%). Then you add in your taxes, insurance and monthly maintenance (approx $500.00) which brings your total monthly living expense to $2,075.00. If you purchase a condo for $300,000.00 under the same terms your monthly living expense would be about $1,585.00.

2) Give the breakdown in item "1" above to your/an accountant and ask how much you will save on your annual income taxes by owning this type of condo (I would dare to say that for most people it would be about $300.00 per month but you must check with your accountant!). If you subtract the tax savings you probably find that you are paying less than it would cost you to rent the same condo!

3) In order to qualify for the above mentioned deal at $400,000 with 20% down, you would probably need to be showing an income on your income tax returns of about $65,000.00 assuming you have no other debt (for the $300,000 purchase with 20% down the income needed would be about $47,000.00 assuming you have no other debt). This is also assuming you are a qualified buyer.

4) The most important first step is that you meet with a mortgage banker and get yourself pre-qualified! In order to do this correctly, you must meet with the banker and bring your last two years tax returns and W-2s, last three months bank statements (where you have that $90,000.00), recent pay stubs and allow them to run your credit. At that point the bank will be able to tell you if you are qualified, the rate they can offer you, how much you can borrow and how much the loan will cost you every month.

5) After that you should look at every condo available in your price range and area and see if any of them meet your needs.

If I can be of further assistance, please let me know. Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
1 vote Thank Flag Link Tue Jan 17, 2012
If I were you, I'd continue to rent because even a co-op is going to run you more than what you're paying right now when you start adding up mortgage & hoa fees. However, $50K in the bank isn't going to do you any good. I'd take advantage of these historic lows and the advantage of being a 1st time buyer and invest in a 3 or 4 family house. Good luck!
1 vote Thank Flag Link Fri Mar 2, 2012
First steps:

1. Meet with a Local Mortgage Banker to get prequalified for mortgage financing. The Mortgage Banker will review all facets of your loan request to answer your questions with regards to the types of loans and maximum loan amounts you could qualify for.

2. Get a referral to a good, local, real estate attorney. Call the attorney, retain the attorney so you have her information handy when you make an offer. Having that information at time of offer helps you demonstrate to the Seller how serious you are, and they will consider your offer with more interest.

3. Line up a Home Inspector. A good home inspector will scare the heck out of you: that's what you pay him for! But you'll concentrate on the fundamentals of the property: roof free of leaks, plumbing, heating and electrical up to code and in good working order. Again, when you make an offer and you have your Home Inspector ready to go, your offer will be considered with much more interest by a Seller because you truly have your "ducks in a row" and your preparation demonstrates your serious attitude about conducting the purchase transaction in a timely manner.

4. Find an experienced Local Realtor who works in your desired shopping area. A serious pro Realtor will refuse to show you homes until you are Prequalified for mortgage financing. Don't take offense! That Realtor doesn't want you to be disappointed and wants you to have a smooth experience as you shop for your new home.

Put together your Team of real estate professionals and shop 'til you drop!

Good luck!
Trevor Curran
NMLS #40140
0 votes Thank Flag Link Sat Apr 28, 2012
Thanks Mack! This is my concern and like you said "of course all of the real estate agents are going to buy." Most the rent vs. own calculators I've used (Trulia, NYTimes, etc.) say that I would be saving money by renting. Even when I up my rent to $1,000/month. So it's quite confusing when I ask a lender or a real estate agent and they tell me the opposite. I worry about the motive of taking advice from lenders and agents.
0 votes Thank Flag Link Tue Jan 24, 2012
I would keep renting. $800/month is less than a lot of co-op's maintenance fees in NYC. If you are looking at a decent condo, that's going to be at least $300K. A 20% down payment and you're going to be paying at least $1500/month in mortgage payments plus the maintenance or common charges of say about $300. So you will be spending about $1000 more per month out of pocket. Remember, with a 30 year mortgage, that $300,000 condo actually costs $600,000 over the life of the loan. My family bought an apartment hoping that we would save over renting (we were renting for $2000/month.) Our monthly payments came out to about $2000/month, but we wound up losing $100K when the baby came along and we had to sell at a loss. Of course all the real estate agents are going to tell you to buy!
0 votes Thank Flag Link Tue Jan 24, 2012
Thanks for all your quick and thorough responses. It's all very helpful. It sounds like I need to get a mortgage pre-approval so I understand. Thanks Mitchell for the breakdown and detailed considerations. To Debbie, yes my head is spinning a little, but I'm more educated at least. The alternative to buying would be just sticking my money in some kind of really conservative low interest bond (which is in now) and continue to rent. I'm wondering if that's kind've silly considering I could technically afford a down payment on a place at this point.
0 votes Thank Flag Link Tue Jan 17, 2012
Well Derek, if your head isn't spinning now, that's amazing, because mine is!

No one here can tell you whether you should continue to rent or buy......no one knows your full financial picture...........so.........do yourself a favor......speak with a mortgage rep and see how you look on paper....then see how comfortable you are with the numbers.........then you can make your decision on how to proceed.

A local agent can show you what your price range looks like..... once you know what your price range is!

Good luck!
0 votes Thank Flag Link Tue Jan 17, 2012
0 votes Thank Flag Link Tue Jan 17, 2012
If you have working capitol and good credit, yes, start looking. I would consult with a Mortgage company first, get a price range and then go looking!

Give me a call: (212) 300-3919
0 votes Thank Flag Link Tue Jan 17, 2012
Hi Derek,

To purchase a property or to continue renting is a decision only you are able to make. In regards to market conditions, yes mortgage rates are at an all time low and banks are still lending (dont believe all that you hear on TV), so it may be a good time to purchase a property. But what may be good for one person may not be good for you. If you're interested in getting pre-qualified for a mortgage or interested in finding out more about mortgages, feel free to contact me.

Best of luck!

Rocco Guercio
Sr. Mortgage Specialist
Direct: 347-462-4210
0 votes Thank Flag Link Tue Jan 17, 2012
To buy or rent is a decision only you can make; it’s all about costs and lifestyle. Costs—financing v. moving-in, mortgage v. rent, repairs v. upkeep. Lifestyle—stability v. mobility, predictability v. flexibility, equity v. freedom from debt. It used to be all about equity. Now, there are other variables to consider in the balancing of the buy/rent equation.
0 votes Thank Flag Link Tue Jan 17, 2012
Derek Weber
I would take advantage of the current market and interest buy.
If you have any further questions please call me at 347 932-0609 Fajardo.
0 votes Thank Flag Link Tue Jan 17, 2012
Hi Derek!

It depends on your income, how much of a mortgage you can qualify for.....and your comfort level and spending habits.

$800 a month won't go very far in covering your mortgage, insurance, taxes and maintenance, if you buy a condo.

So.........the big quesion is...how much more can you comfortably afford to spend each month?
Once you have the answers to the above questions.......then you can see what is available in your price range, and whether you're better off renting or buying at this time.

Good job with the savings, though!

Good luck!
0 votes Thank Flag Link Mon Jan 16, 2012
Now is a good time to buy as prices are low & so are interest rates & think of the tax breaks!. There are many differences between Queens & Brooklyn so you will have to walk around different neighborhoods & get a feel for what makes you comfortable & what is important to you. Think about your commute & what you are looking for in a neighborhood. Brooklyn does have great architecture, however I think Queens may have better pricing.
0 votes Thank Flag Link Mon Jan 16, 2012
Hi Derek,
I admire your discipline and money management ability, my advice is to contact the loan officer at your savings bank and request a mortgage pre-approval. With that information in hand, decide on how much living space you require ( 1 or 2 bedrooms). There are other factors to consider, but i'm sure you will know how to proceed when you have all the facts. I am a buyers representative.

Phillip Benn
Kings Realty Professionals
Cell: 347-526-3501
Web Reference: http://www.nyrealty411.com
0 votes Thank Flag Link Mon Jan 16, 2012
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