Hello Pickles, three things.

1. You cannot time the market- interest rates are at long time lows this will not last forever, they will go up.

2..Prices are the lowest in many years ,which make real estate more affordable then it's been in years.

3.Two bedroom units are always more desirable then one bedroom apartments.

Add in the $8,000 tax credit being offered and you have a good opportunity.You can never predict the future, nor can you time the market. A two bedroom unit is and always will be more desirable then a one, although the price is higher, if you calculate the difference in payment with the low interest rates and add in the $8,000 tax credit it may be do able. Do your research but try and take advantage of todays real estate market.You also might want to look at the neighborhoods with the potential for increase in value, over other areas that seem to be high priced already, this may help with the future plans.

New york state has had over 1 million people leave due to high taxes. less people mean lower prices. Look at the links below. You will see some things about the real estate market that many do not realize. New york is not immune. It simply took a little bit longer to start going down.

http://www.businessinsider.com/henry-blodget-housing-market-2009-4 <-- shows lots of charts showing what is going on with the market

both of the following talk about the millions of foreclosures coming to a neighborhood near you.
http://www.dsnews.com/articles/delinquencies-foreclosures-at…
http://www.housingwire.com/2009/10/19/27m-distressed-propert…

Reasons for housing market not rebounding
http://www.housingnewslive.com/articles/reasons-housing-mark…

The "Shadow" Foreclosure Inventory
http://business.theatlantic.com/2009/09/the_shadow_foreclosu…

Finally, read this thread. It has over 4,000 replies in it. Look at what buying would have done. The question was asked in april of 2008. Had they bought then they would ahve lost over 20% in value. I see no reason to expect house prices to go up and millions of reason to see them drop in the next few years.
http://www.trulia.com/voices/General_Area/Open_Opinion_Threa…

Absolutely buy the 2BR now. Its is FAR more marketable than a 1BR and you will most likely get it at a much lower price now, than you will in 3-5 years from now. I think that buying bigger now is better because the rates are lower and prices are still flexible. The market is slated to recover drastically in the next year or so. I wouldnt risk it. Also, you need to assess the real difference in price between the 1BR and the 2BR. I highly doubt that it would substantially alter your lives to take the extra 50000 plunge. When you think about it, the difference in higher mortgage payments is actually balanced out by the amount it would cost you to move again (realtor fees to sell the 1BR, moving expenses, cloing fees, general heart ache and stress). Let your husband read these responses and he will come around. Best of Luck!

Josh Smiling
Principal Broker
Smiling Realty
917 807 7942
718 443 9100

Some questions for you. (Then a suggestion at the end.)

What happens if you can not sell when you want to move later?

If you wait for a few more months will it change anything in your life? If not watch prices. They may drop.

How much will you lose selling your coop at a 6% realtor ($15k cost) commission, plus closing costs, plus a 5% drop in prices? What if it is a 10 or 20% drop instead?

What do the HOA fees cost? How much will insurance cost?

What are taxes? How much for heat, electricity, water, sewer, gas ( did I forget anything?) a month?

How much of your monthly payment would go towards interest, and how much towards principle in the first 4 years? The first year pays almost nothing off for principle. Look at some amortization tables. They are shocking. It might be possible to pay in $50k and only have $8k go towards your principle. Interest gets paid first. Check this out with your lender.

I am actually wondering if you would be better off to just rent for awhile. You have done real well separately saving money. 20% down is fantastic. Now living together you should be able to save even more.

I would almost say you should go for the 2 bedroom now, but since you said they are not big enough for what you want it seems like a bad choice. I would hate to see you stuck in a place you do not fit in any longer but can not afford to leave.

The last option is very simple. Do not think about house prices dropping although it is likely. Instead concentrate on what you want where you want it. Ignore the listing price. Offer what you can afford. $250k and that is it. Remember, there is a difference between what is asked and what will be accepted. Maybe after you offer on 1 or 50 or 100 places you will find a willing seller. Then the question you asked will be moot.

Pickles,


You should try and get the two-bedroom now as prices have come down substantially in the last three years. At some point they will start to go back up and with mortgage rates being as low as they are right now, it is the perfect time to buy. Take a 30 yr mortgage as the the payments are much less than a 15 year mortgage. You can always pay down principle if you have extra money each month. Over time, your salaries should increase and the value of the co-op should increase which would put you in a good position to upgrade to that home you want.

Edward Angelino
Power Express Mortgage Bankers
3609 E Tremont Ave
Bronx, NY 10465
718-904-0004

Dear Pickles:

Only you and your husband can answer this question. Just for what it is worth, here's my two cents worth:

1) Whatever you wind up purchasing it would be extremely beneficial for you to make sure you go at least 20% down so as to avoid having to pay for private mortgage insurance.

2) If prices go up which they probably will over the long haul, you may never be able to afford that bigger condo. If you can buy it now you will get it cheap as prices are down relatively speaking. As an example, if prices go up 10%, your $250,000 co-op would be worth $275,000, but the $300,000 bigger co-op would go up to $330,000, thus you would be down another $5,000.

3) Whatever you purchase, if you may sell in the near future you may be better off with a 30 year mortgage instead of a 15 year. You would have lower monthly payments and a bigger tax deduction, plus you would be able to spend more on the purchase price and still stay within your monthly budget. If you have a financial windfall you can pay extra money to the principle thus lowering the time-span of the mortgage. If you make a 13th payment every year a 30 year mortgage will be paid off in about 22 years.

I hope these ideas are helpful to you. If I can be of further assistance, please let me know. Good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, inc.
Office: (718) 645-1665
Email: MitchellSFeldman@aol.com