Should I consider buying ? 120k income, 20k in savings, no debt, 710 credit score, single, late 28.

Asked by Jerome, New York, NY Mon Aug 20, 2012

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23
Annette Holm…, Agent, New York, NY
Mon Aug 20, 2012
Hi Joe,

That is a great question, one can probably find a good answer by sitting down with a lender and learning about your options. Nothing is better than running the numbers and hearing what your options are, if any.

You have to be mindful of closing costs. If you only have 20k to put down, it may be hard for you to find a building here in the city. You would have to find a Co-op that allows 10% down leaving you some room to still hold on to closing costs and maintenance costs of up to 1 year, as most Co-ops like to see money in the bank after closing.

If you would like the name of some lenders to help get you started please feel free to contact me.

Best,
Annette

Annette Holmgren
Licensed Real Estate Salesperson
BOND New York
1500 Second Avenue
New York, NY 10075
P 212-584-4220
C 401-837-9445
F 212-584-4221
2 votes
Joseph Hasti…, Agent, Bayside, NY
Fri Aug 24, 2012
Hi Joe. I'm gonna chime in on Queens. $20K isn't going to buy much there either. Even a studio at $150K with a 20% dp would be more than you have saved and we've not even discussed closing costs and post closing liquidity. The idea however is a good one. You'll get a better bang for your buck in Queens.

So, here's the thing. You're not quite ready to move forward. I suggest you hunker down a bit and that means don't buy any big items and save more. If the FICO score you refer to is recent, check for errors on your credit report that can be corrected. Make sure you have no late pays for the next year as you need to raise your credit score a bit.

Keep in mind that you'll need the deposit money, closing costs and additional assets after the close that are roughly equal to a year of your debt service and maintenance. I wish you good luck.
1 vote
Scott Rose, Agent, Highland Park, IL
Mon Aug 20, 2012
Joe
Whether to buy or not depends on your situation. It's a great time to buy and lots of reasons with low rates and great affordability, but what about your lifestyle? Are you planning on staying in the area for the next 3-5 years. Sit down with a qualified real estate professional who can explain options and what is best for you in the long run. Contact me if I can be a further resource.

All the best,
Scott Rose
Coldwell Banker
Scott.rose@cbexchange.com
847-921-4082

http://Www.scottrosehomes.com
1 vote
Corinne Furl…, , New York, NY
Mon Aug 20, 2012
Yes! Absolutely buy! Your rent will likely be comparable to a mortgage payment, so you are always better investing in property if you have the ability to do so (which you do). Good luck on your future purchase! If you have more questions please feel free to contact me.

Corinne Furlong
Metropolitan Property Group
(631) 879-3539
corinne@metropolitanpropertygroup.com
1 vote
Katherine (K…, , New York, NY
Mon Aug 20, 2012
Joe--

Absolutely. Market conditions are great for buyers right now.

I would respectfully disagree with some of the below responses right now and say that it's not a question of WHETHER to buy; it's more a question of WHAT to buy (i.e. what you want to do with it)

If you're buying something as your primary residence, then you will have less trouble. In that case, the thing to figure out is whether you want a co-op (more restrictions, more complex interview/application process, lower closing costs), or a condo (easier to rent out to a tenant, easier to purchase, fewer in Manhattan, higher closing costs). If you're buying an investment property and want to put a tenant in there, you need to make sure you buy the right kind of place that will allow that.

All that said, I'm guessing you're looking to buy a home for yourself, not something you want to rent out.

A 710 credit score isn't off-the-charts (as far as lenders are concerned these days), but it's definitely respectable. If, for some reason, you have trouble with a conventional bank, there are plenty of other entities that can help--like credit unions and the like.

Frankly, I think anyone with the means to buy is CRAZY not to buy right now. If money were no object, I'd be buying Manhattan real estate left and right. If I hit the Powerball and suddenly had a lump-sum $150 million payment, a third of it would go directly into real estate transactions.

But that's me, and that's because I'm a licensed real estate agent (with Prudential Douglas Elliman), and I specialize in first-time buyers, HDFC properties, and foreclosures. I've also taken enough real estate investment intensives to make me very, very aware of a) the fact that these market conditions are unlikely to come along again for decades, if even in our lifetimes, and b) how to analyze a property and find a great value.

Also, remember that working with an agent on the buyer's side is free; the seller pays the commission. So you basically have someone doing the work and due diligence for you, negotiating your side of the deal, and then getting paid by someone else.

Would love to talk further if you need some help. I don't like to put my personal information online, but I'll send you everything right down to my NY real estate license number if you want to email me directly.

Good luck!

-Kate-
renee0131@aol.com
1 vote
Filippa Edbe…, Agent, New York, NY
Mon Aug 20, 2012
Hi Joe,

buying or renting is a question that many New Yorkers are asking them selves in this market. Rents are soaring ($3,459 was the rent of the average Manhattan apartment this July), interests rates are at historical lows, and if you have been following the NY market you have seen that sales prices are still not back up anywhere close to the market high a few years ago.

The decision still largely depends on your personal circumstances. How long are you planning to stay in the city (I presume that you are thinking about buying in NY, NY), what does your job situation look like, do you have any reserves, what is your back up plan?

With interests rates this low it is very tempting to take advantage of leveraging your funds with the help of a bank, IF you can get a mortgage. As someone already mentioned, when you buy you are essentially paying yourself by paying down your own mortgage and building up equity, as opposed to paying down your landlords mortgage. That is a compelling thought. Also, don't forget that the main savings is the tax shelter that owning your own apartment provides.

You will have to think about a couple of things besides the mortgage:

-down payment (in general 20% of the sales price. Even if a building allows a lower down payment AND you can get a mortgage, with today's stricter lending rules the bank is unlikely to allow you a %5 or even 10% down payment)

-monthly costs (besides your mortgage payments, you also pay maintenance and taxes)

-closing costs (I'd be happy to send you a closing cost break down)

I agree that you'd be best of working with a Buyers agent who can guide you and advice you. You would want someone to represent you and your interest, and many buyers do not understand that unless an agent is explicitly working for you the Buyer, he/she is working for the Seller. This has nothing to do with by who the agent or broker is paid, this has to do with representation and to who an agents fiduciary duties are.

Someone mentioned looking into short sales or REOs--this is virtually non exciting in NYC, and is not an easy start for a first time home buyer...

Feel free to reach out. I'd be happy to answer any follow up questions.

Best,
Filippa
filippa@townrealestate.com
1 vote
R Wright, Other Pro, NY,
Wed Aug 29, 2012
Hello Joe - You should certainly consider buying. Closing cost can be minimized if there are no points charged on the loan. At today's rate you could purchase a home up to $350,000 with a 3.5% deposit. I am 100% confident I could also negotiate sellers concession into the loan which would further help to free up your cash.

The only unknown here would be the taxes. If you choose a property with taxes above $9000 it could be a problem. If you would like to discuss a mortgage or real estate purchase please contact me anytime at 914-299-0420
0 votes
Alex, Home Buyer, Los Angeles, CA
Tue Aug 28, 2012
You might want to rent for another year or two and build up more savings. Banks have made it very hard to buy anything with a small deposit.
0 votes
, ,
Mon Aug 27, 2012
I would say that it is unlikely that you would need a year of monthly debt service in reserves, although you would certainly need more than you have. Fannie Mae requires 2 months of reserves now, something that they never did before, although co-ops may want more, but I doubt anyone is asking for 12 months reserves outside of Manhattan, which you clearly can't afford.
One other thought, do you plan on getting any gift money? If so, as long as you have 5% of your own funds in the transaction, and find a co-op that will allow you a 10% down payment, you could get something to work out. Again, the reason I say co-op is because of the much lower closing costs for you. If you are getting a larger gift, then you could possibly find a condo.
0 votes
Devona Garri…, , Beaumont, CA
Sun Aug 26, 2012
I would say yes. Rates are starting to inch up, and home prices have leveled and even come up a bit in some areas. I couldn't think of a better time.
0 votes
, ,
Fri Aug 24, 2012
The biggest issue here is the one that only one person pointed out, $20,000 in NY doesn't give you very much buying power. You might be able to buy an inexpensive 1 bedroom co-op in Queens or on LI with that, but even that could be tight if you can't work a seller's concession. Although the closing costs that we must disclose on our Good Faith Estimate are not that much, you also have various fees due to the co-op for their application fees, credit report, their closing agent, your own attorney, 1st month's maintenance, I think you get the idea, they add up. Your monthly payments could work out to be no more than rent, and you will get a tax deduction, but the amount in savings doesn't seem to be enough.
Another thing is that while 5 years ago we thought of any credit score above 700 to be fantastic, that is not the case any more. For every 20 points below 740, there is an adjustment to rate. Also, if you ran your own credit and got that score, it might not be what your score actually is. Either way, your rate will be about .25 off the best in the market with a 710 score. Also, there are certain lenders that will not do a 90% co-op loan with a credit score below 720. You may want to figure out why your score is 710. Maybe you don't have enough credit, or don't use credit cards at all. That can actually be worse than using them.
0 votes
Annette Levi…, , New York, NY
Tue Aug 21, 2012
Joe,
Part of purchasing is emotional. Consult with a lender to work out a budget on what you can afford and see if you are comfortable with the monthly cost for an area you want. Then speak with your accountant. Will a purchase make a difference in the amount of taxes you pay? Then decide what you are conforable with.
0 votes
Albert Capoz…, , New York, NY
Tue Aug 21, 2012
Joe:

I think you already know the answer to that question. Why do I think you know this?

1. You're poking around a website that's focus is real estate;
2. You've just asked a question on a site the answer to which is the bread & butter of more than 50% of it's target audience.

So I hope you don't mind if I ask you this question: "What do you think our answers will be?"

If you guessed 'yes' then you're right. And you're also right in thinking that the time might be right for you too. Go ahead. Take the plunge and dive in. . . but don't be careless!

Ask for help even when you think you don't need it from real estate professionals and you'll do just fine.

Albert Capozzelli, Licensed Real Estate Salesperson
A.C. Lawrence & Company
0 votes
Ms. Taylor M…, Home Buyer, Little River, SC
Tue Aug 21, 2012
You can purchase a foreclosure that is deeply discounted.. or consider a Lease Option.
I buy/and locate properties all over the US
Email me at: mstaylormorrison@yahoo.com
and tell me your needs and the area you seek
Im in Myrtlebeach but buy properties there..
and I can help you
0 votes
Fajardo Dela…, Agent, Flushing, NY
Mon Aug 20, 2012
Take advantage of the market and interest rates. Like I say
to my clients, don't stand on the sideline guessing your next move.

Fajardo Delacruz
Licensed Real estate Agent
Century Homes Realty Group llc
Direct Line: 347-932-0609
0 votes
John Peitler, Agent, NY,
Mon Aug 20, 2012
Yes, buy. Please contact David at 212-714-1027 ext 14 for assistance. Thank you and good luck.
0 votes
John Peitler, Agent, NY,
Mon Aug 20, 2012
Yes, buy. Please contact David at 212-714-1027 ext 14 for assistance. Thank you and good luck.
0 votes
Christopher…, Agent, Tarrytown, NY
Mon Aug 20, 2012
Hi, you sound like you are in great shape to purchase. Your best bet is to contact a mortgage profdessionl, get pre approved, and see what your options are.

Chris
0 votes
Thomas Brady, Agent, Plainview, NY
Mon Aug 20, 2012
It depends on a few things. Even locally the markets are uneven from place to place, if you buy in a place which has maintained some degree of strength through the crash, hopefully it will appreciate quicker when the market does recover. That being said if you are buying a home to live in than consider how it would impact your life. I doubt you are buying an investment property given your stated numbers, but if you were rentals are quite strong in almost all areas right now. Personally I think it's a good time to buy because interest rates have risen for three straight weeks, that eats into your buying power. Prices nationally have also been rising, even though volume is down in many areas. This could very well be the sweet spot to buy in, where both interest rates, and prices have bottomed. It would seem that you have no great rush, the competition will start to thin out soon (inventory will drop a little also). Think about working with a buyer's agent, try not to limit yourself too much in areas and you may be able to come upon a great short sale, or re-sale, I would try to be a value buyer if I were you. Then you might be able to trade up and put some money in your pocket in short order. Good luck!
0 votes
Linda Zhao, Agent, New York, NY
Mon Aug 20, 2012
The first owner is saving your rent fee in your saving account.
Paying for a rent means you paying the owner's mortgage.
Think about it.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Aug 20, 2012
A decision only you can make; if you are ready to buy no reason not to consider the idea.
0 votes
James Gordon…, Agent, Hamilton, OH
Mon Aug 20, 2012
Joe I think Larry tried to say 4 or 5 years not 405. Buy right and with the future in mind you will be ok.
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Mon Aug 20, 2012
If you're going to be living and working in the same area for a minimum of 405 years your would be better off buying than continuing to rent, however if you're not certain that you'll remain in the same area for at least this long, then I would advise not buying.
0 votes
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