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Tuesday, June 26, 2007

IF ONLY IT WERE AS EASY AS JUST CLICKING MY HEELS

Ever since I was a child, I have hated numbers. Math is confusing and scary to me. Financial agreements and anything that smacks of Wall Street bores me. I have never rolled over a 401(k), have no clue what is in my Roth IRA (which some ex-boyfriend made me set up years ago) and can not even tell you with any precision how much I make, except that it is less than the amount of my American Express bill every month. On the other hand, I am finally forced to admit that my self-imposed ignorance of anything financial is a hindrance.

Husband and I are taking the leap into adulthood and buying a home. I pictured the process akin to renting: We would follow a broker around NYC and looks at apartments until we found one we liked. Then we would tell them we wanted it, have our excellent credit confirmed and viola! Apartment would be ours. It turns out that is not even close to true.

Let’s start with the fact that we are picky. I refuse to live anywhere but the Upper West Side of NYC and, although that includes the up and coming Morningside Heights neighborhood, I will not move above 106th Street and, if above 97th Street, I refuse to be east of Amsterdam Avenue. Oh, I also will not live below Columbus Circle and if south of 65th Street, I won’t live west of Broadway. So pretty much I am restricted to one of the priciest sections of Manhattan. Plus, now that Sister is on the West side, I am not moving far from her.




Now that we nailed down a location, the apartment must have a minimum of two decent sized bedrooms. Husband and I want to have children soon and it would be ridiculous to have an apartment that we outgrew as soon as a baby was born. (Note: I am not into co-sleeping since even Husband takes up more room in the bed than I willingly will part with and I also refuse to live like so many other NYC families where the living room couch becomes the marital bed. In the words of Husband – NFW!)

So, we search high and low (well as high as 106th Street and as low as 66th Street) and see one place that could work, but will not allow dogs (Tiki is a non-negotiable part of the package) and then we find it. An adorable apartment in a well maintained building on 106th and Broadway. Near the subway, restaurants, bagels and Riverside Park. Two blocks from a dog run. Bright, quiet and full of pre-war details like a 66 foot hallway with exposed brick. The only thing it was missing was outdoor space but we already had conceded that we would not afford an apartment with a private garden again and really, who needs outdoor space when three different parks are within 100 yards of the front door?

And so much space! I can envision making this place home.

Now, for the financials and the part where I get confused and lost. The apartment badly need renovations. It needs a new kitchen and bathroom and the maid’s room is really just wasted space. I would knock down the walls from the bathroom to the kitchen, enlarge the bathroom and build in a laundry cabinet for a washer/dryer and turn the kitchen into a real chef’s kitchen with an island to make it eat it. And the paint needs to be stripped and the floors polished and sanded. So we are talking serious money.

So, Husband comes up with a brilliant plan. We put 10% down (we have been saving diligently for years for this moment!), withdraw a bit from our 401(k) and take out a mortgage to cover the rest of the cost of the apartment as well as the cost of any renovations. We figure we would offer about $100K under ask since real estate prices are falling.

Well, it turns out that prices are falling everywhere but NYC, where they have been steadily rising. And, except for new developments (which are priced so high as to be offensive), you are pretty much stuck with coops and all the crap that entails. Like an obligation to put down 20-25%. Who has that kind of cash lying around???? And, you can’t take out a home equity loan because in a coop, you don’t really own your apartment, you own stock in the corporation that is your building and your share entitles you to live there…or something. So we can’t finance the renovations through the mortgage and we need more money than we can dream of for a down payment. Oh, and the last apartment sold in the building went for above asking price!

I spoke to the mortgage broker and ended up listening to her talk about options for 20 minutes, none of which made any sense to me. All I could see was my little dream apartment slipping away. I finally told her I did not understand what she was talking about and (politely) said that I could not summon the energy to deal with it anymore. Head safely back in the sand, I went home and cracked open a couple bottles of wine in which to drown my sorrows and forget that I did not know the answers to questions like “How much does Husband make per year?” and “Do you own any stocks?”

Grrr. Forays into adulthood suck.

5 comments:

Shawn said...

Don't lose heart. There are still some mortgage brokers who are effective and credible. Hey, haven't you thought of actually buying your own home? You can even if you don't have any credit rating through refinance mortgage loans bad credit.

Suzanne said...

Actually, you can take out a home equity loan on a co-op to finance the renovations. You just need board approval.

Your other option, if you really want to put down 10%, is to find a sponsor unit. In that case, you can put down whatever you want and you don't need to go through the co-op board for approval, either. This happened to be how Husband and I got our apartment, but we borrowed from his parents anyway and repaid them over time so we could avoid a jumbo loan, which is something else you should consider. Jumbo loans are loans over $400,000 or so, and they carry extra fees and interest (maybe 25 basis points, or .25%). Finally, even if you pull all the financing together, if you don't also show that you have a cushion for hard times, the co-op board may reject you.

We'll discuss more on Thursday!

Anonymous said...

Keep looking, some mortgage brokers can get loans others can't.

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jg said...

Ex and I bought our own place when T was a baby... whatever... not all it cracked it to be. Renting is so much easier and in NYC a lot of the time it actually makes sense to rent.

That said, I do believe that one of our partners in NYCSR is a mortage broker. Maybe you could get some advice.

Peg said...

I know NADA about NYC real estate, but I do know mortgages--be sure to shop around for the best rate, or use a mortgage broker that has access to many lenders, not just one.

And, Sara, welcome to the ranks of the Four-Oh-One-Kay-Withdrawers! We evil-doers love company! ;-D