Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts

Sep 10, 2015

Who Lends Here in NYC Coops and Condos

As a NYC listing agent one of my first tasks when I land a new listing is to find a lender that will loan in the building. Not all lenders will loan in a particular building. Some listing agents leave it to chance hoping the buyer will find a lender that will approve the building.

In NYC a buyer/borrower may be very well qualified for a loan but the coop or condo they're looking to buy may not qualify or be approved by their lender. There are many different reasons and variables why a particular lender may not loan in a certain building. Getting a building approved can be a long process particularly in self-managed buildings. A buyer making an offer with a pre-approval from a mortgage broker with a history of closings in the building may be considered a stronger offer by the seller.

Richard Barenblatt, a NYC mortgage broker started new website Who Lends Here  a free solution resource for buyers, sellers and agents in Manhattan and Brooklyn.  

Just type an address into the designated box on Who Lends Here’s homepage. The site then displays a list of mortgage specialists who have done business in the building.

By showcasing lenders who have experience closing deals in specific condos and co-ops, potential buyers gain streamlined access to competitive financing options, despite the underlying ownership structures that might normally impede the process. A buyer's offer with a pre approval from a lender that has already done loans in the building may have a competitive edge.

The site is notably simple and transparent and plans on expanding to the Bronx and Queens.

Jan 10, 2015

Interest rates at ALL Time Lows

The Bond rallied and rates dropped, it’s a great time to buy or refinance.  Rates are now at historic lows. Start the new year by purchasing a new home in New York City. 

Interest Rates as low as: 

•             7 Year Arm is 2.75%
•             10 year Arm is 3.0%
•             15 Year Fixed is 3.125%
•             30 Year Fixed is 3.625%

Oct 26, 2014

The Importance of a Pre-Approval in a Seller’s Market


Urban Myth "A pre-approval will lower my credit score" 

I'm often contacted by buyers that want me to show them apartments. Often these buyers do not know how much apartment they can afford. They require financing but have not been in contact with a lender.

I recently spoke with a buyer that was interested in one of my listings. When I asked if she was pre-approved for a co-op loan she told me that she didn't want to get pre-approved because it would lower her credit score. 

An "urban myth" and not a valid reason to not get pre approved before looking for an apartment in Manhattan. A credit score may have a temporary glitch after several inquiries although an inquiry is not an application for credit. This first time buyer told me "she begs to differ" and that she didn't want to get a pre-approval every time she viewed a property

The Importance of a Pre-Approval in a Seller’s Market

The lenders I work with and recommend will pre-qualify and pre-approve a buyer for several months at a specified maximum amount. 

The pre qualification informs sellers and their brokers based upon the information received, the lender is indicating that the applicants’ financial, credit, and income information appear to support their eligibility for the loan amount listed on pre-approval letter. It is not a loan commitment. A loan commitment may be issued following the applicant’s consent to move forward with the loan, the payment of any fees, a satisfactory appraisal and underwriting approval.

Buying a home and getting a mortgage is one of the biggest and most important lifetime financial decisions and a primary reason why a consumer should be concerned about their credit score. In my professional opinion and experience if an inquiry on your credit report from a mortgage lender has an adverse effect that lowers your credit score enough to affect the interest rate offered or your loan eligibility you have bigger issues than a couple of inquiries from lenders. Paying bills on time and paying down debt matters a lot more.

Lenders are competitive. They also know how to read a credit report. They understand a buyer may be shopping for a mortgage when shopping for a home. In fact, if they see their competitor's inquiry on your report it may be leverage to your advantage. If one lender wants the business they may try to offer a better deal than their competitor.

Understanding The Related Costs of Apartment Buying

You'll need to think about more than a mortgage payment to determine if you can afford an apartment in Manhattan. To assure you are purchasing a home within the confines of your budget, you must consider down payment requirements, closing costs, taxes, carrying charges, and yearly maintenance requirements as well.

How much can you afford?

First consult with a mortgage broker or banker to determine how much of a mortgage you qualify for. Calculate the estimated mortgage payment plus monthly maintenance (coop), common charges and real estate taxes (condo).

Several formulas exist to help determine how much a lender will allow a consumer to borrow. One of the more accurate formulas is a front- and back-end ratio. It states that the buyer can afford as much as 28 percent of his or her gross-monthly income toward the monthly mortgage payment, assuming that the consumer's other debt payments (credit cards, car loans, student loans, etc...) are less than or equal to 8 percent of his or her gross-monthly income.

Most NYC coops have more stringent financial requirements than most lenders. Most coops use a 25%-30% debt to income ratio formula. Many coops will only allow a maximum of 75% financing although some will allow 80%. Coops may also require liquid assets available after the closing to cover 2 years worth of maintenance or 1 year of mortgage and maintenance. Every building varies and uses their own formula.

While condos and some coops will allow 90% financing a seller may not want that risk and lenders will require PMI (private mortgage insurance) increasing the debt to income ratio. A minimum 15% or 20% down payment may be required. 

Manhattan mortgage bankers and brokers

Jun 1, 2011

High Conforming Loan Limits Reduced in NY in Oct.

A few years ago during the financial credit meltdown Congress raised the limits on conforming loans in expensive housing markets like NYC (Manhattan) as a temporary emergency.

Currently the “temporary” limit on these loans is $729,750. This means that if you put 20% down on a $900,000 home, you can get a conforming loan in the amount of $720,000.

Effective October 1, 2011 this temporary legislation expires and is not expected to be extended. In October The amount will be lowered to $625,500 for a High Balance Conforming Loan.

So, what does that mean to Manhattan buyers? If you buy the same $900,000 home and put 20% down, your loan will now be considered a Jumbo loan. Rates on Jumbo loans are typically 1-1.5% higher, so if today you could get that loan today at 5% your payment would be $3865.12. The same loan amount using the Jumbo rates would be 6-6.5%, bringing your payment to $4550.89.

Over 30 years, that totals over $246,000! The other option would be to put a larger down payment on the property, to the tune of nearly $100,000.

If you've been thinking about buying and selling (sellers will be effected by less qualified buyers) Now is the time to buy and sell in Manhattan. It will cost you more in October. About $100,000 more.

Sep 30, 2010

Congress Extends $729,750 Mortgage Limit

Congress has extended the policy allowing homeowners in Manhattan and other expensive real estate markets to secure government backed mortgages up to $729,750.
Congress voted to keep the maximum size of loans guaranteed by Fannie Mae and Freddie Mac and the Federal Housing Administration at the current level through the end of 2011.

Without the extension, the loan limits would have been reduced to $625,000. The limit prior to 2008 was $417,000. $417,000 is the limit level in most of the U.S.

The average sale price in Manhattan is $1,523,085 (August 2010)

The median sale price in Manhattan is $1,172,500 (August 2010)

Sep 7, 2010

Fannie Mae Flip Tax Proposed Rule Change

A draft rule has been issued by the Federal Housing Finance Agency for comment that would create serious problems for Co-op and Condo buyers. The rule would prohibit Fannie Mae from purchasing loans in buildings where there is a Transfer Tax/Flip Tax. 

Regulators have recommended such a rule and on August 12th a draft was issued for public comment. The link below will give you the details of the proposed rule. According to Fannie Mae, the primary intent of this proposed rule was not to have this apply to all Co-ops and Condos. 

Their primary intent is to stop developers from imposing 99 year covenants on new homes that require seller's to kick back a percentage of the sale price of the home to the developer when the home is sold. They are currently reviewing the concerns of REBNY (Real Estate Board of New York) and hopefully, will revise language that would correct this serious problem.

If their response does not assure REBNY that he rules will be corrected, REBNY will ask it's members to join them in reaching out to the New York congressional delegation. 

Link to proposed Rule Change:

Sep 1, 2010

New York is Rebounding

We are continuing to witness a major shift in thinking, with the Federal Reserve, economists and stock and bond investors all reducing their expectations for economic growth, which in turn has pushed mortgage rates back down to record low levels. Contributing to that mind shift was last week's 27. 2% drop in July for existing home sales, which was the lowest pace in 15 years.

However, keep in mind that real estate and economies are local. In fact, yesterdays New York Times  and the Wall Street Journal coincidentally both have bullish articles on New York City's economy and housing market

They go on to say that by almost all measures, Manhattan in particular and to a lesser extent the 4 boroughs, have experienced a milder recession, quicker recovery, lower unemployment and a stronger housing market than the rest of the country. No doubt Wall Street's resurgence this year has contributed greatly to NYC's recovery, which also trickles out (to a lesser extent) to the surrounding suburbs. NYC's housing market in particular has held up very well, with Manhattan's median prices for real estate rising 18.5% in the 3rd Quarter!

Another reason NYC may be doing better is because the NY Metro area's average and median home prices and mortgage amounts are higher than the national average, which benefits from lower jumbo mortgage rates. Recently, the National Association of Realtors (NAR) said, "Sales volume for homes worth more than $1mm across the country are up more than 35% from last year at this time." They go on to say "Homes priced between $700,000 and a million are also on the rise by some 29% over last year. There's no question that's because of the historic low jumbo rates."

Wells Fargo and other lenders have recently dropped their jumbo rates as they get more comfortable with jumbo borrowers, who have higher cash reserves and a higher employment rate. Jumbo underwriting guidelines are still conservative, but for the right borrower, jumbo mortgage rates are at record lows. Jumbo refinancings have also increased, as you don't need as big a drop in rates to break even with closing costs, as many of them are fixed, no matter the size of the mortgage.

The mortgage rate most often quoted in newspapers and on the news is a rate released weekly by Freddie Mac for conforming 30 year fixed rate mortgages. But keep in mind, this rate is with .70 points, so a 0 point rate is .125 to .25 higher. Conforming rates continue to drift down as we get multiple weaker economic releases and mild inflation.

The Federal Reserve's announcement that they plan on continued "quantitative" easing by reinvesting maturing mortgage backed securities (MBS) into 2 - 10 year treasury notes also helped push rates down. The bond markets were hoping for the Fed to also announce they would purchase more MBS, but this would increase their balance sheet which would receive its share of criticism.

The Fed will likely wait till after the November elections before they revise downwards their economic forecast. By then, they will have a clearer picture of the housing market and economy and may institute more aggressive measures then. But Chairman Bernanke has told Congress that more fiscal stimulus would be welcome, but don't expect any progress on that front till after the elections.

All eyes will be on this Friday's employment number, with the consensus for non farm payroll to drop 105,000 which typically sets the market's tone for the following 4 weeks.

Have a safe and enjoyable Labor Day Weekend!

Aug 3, 2010

FHA Loans: No Big Deal in Manhattan

There has been a lot of hype lately about FHA loans. There have been numerous articles not only in respected publications like the NY Times and the Wall Street Journal, but in blogs and websites  from lawyers and lenders.

Many seem to confuse Manhattan with the 4 other boroughs that make up the City of New York. There are many single family houses in Queens and Brooklyn, the Bronx and Staten Island.

In Manhattan about 75% of available housing is in rental buildings. Of the approximately 25% of housing available for ownership about 70% are cooperatives.

    * FHA does not give loans in Coops. The remaining apartments for sale in Manhattan are condominiums.

    * Most Manhattan condos (approx: 98%) have "first right of refusal" 
FHA does not give loans in buildings where there are any "restrictive covenants" right of refusal is a restrictive covenant.

In all of Manhattan there may be about 15 condominiums that have applied and been approved for FHA loans. They are new developments primarily in "fringe" neighborhoods or "up and coming neighborhoods," They are usually in new construction buildings that have had problems selling units.

FHA is a government agency that insures the loans issued by private lenders. The government guarantees the loan payment to the lender if the borrower/home owner defaults. FHA loans traditionally are for people who have less than 10% for a down payment. FHA loans allow 96.5% financing (3.5% down) and for people who don't have good credit scores.

Because of all the hype people qualified for conventional loans are asking about FHA loans. An agent called me about about one of my coop listings. He told me his buyers are very qualified and they are pre-approved for an FHA loan. I said "that's nice but FHA doesn't give loans in coops and even if they did the coop has a minimum down payment requirement".

Interest rates are at all time lows. There are many loans out there today. Call a mortgage broker or mortgage banker located in Manhattan. Make sure you tell them you are looking at buying a coop or a condo in Manhattan. Manhattan is a tiny densely populated island. It is important to understand Manhattan housing. Everything is different here.

Mar 23, 2010

New Fannie Guidelines for Condos & Co-ops

Fannie Mae’s new and stricter underwriting guidelines for condo and co-op financing could add some delays to the application process - and could impact a potential buyer’s ability to obtain a conventional loan for either a new or established condo or co-op if the building/project does not conform. Please note that many banks have their own guidelines. Therefore, the Fannie Mae guidelines may not apply to all condos and co-ops.

I. Lenders are now required to assume more responsibility for reviewing the finances of condo and co-op associations. Under the new guidelines, Fannie Mae requires that lenders perform full scale reviews of most condo and co-op loans (vs the “spot reviews” that lenders performed in the past).

These full-scale reviews will require lenders to review the condo or co-op association’s projected budget to verify the following four essential association budgetary items:

1. The association has an “adequate” budget.

2. The budget contains a line item allocating ten percent (10%) of annual revenues for the association’s reserves.

3. The association has available funds equaling the deductible under the association’s master insurance policy.

4. No more than 15 percent (15%) of the common area fees are delinquent by more than one month.

Note: Increased insurance costs have resulted in associations increasing their insurance deductible amounts to reduce annual premiums. Insurance deductibles can be quite substantial. Fannie Mae does not require a separate budget line item for insurance deductibles, but the potential cost of deductibles must be accounted for in the budget. Insurance deductibles may be included in the reserve fund or may be a separate item. In either case, the lender must determine that the project has the ability to fund insurance deductibles

II. Fidelity insurance issued in the name of the condo or co-op will be required for condos or co-ops with 20 or more units, ensuring that homeowner association funds are protected. The amount of fidelity coverage must be equal to three months of assessments/maintenance fees.

III. No more than 10% of a project can be owned by a single entity.

IV. No more than 20% of a project can consist of non-residential space.

Content Resource: Fannie Mae Single Family 2009 Selling Guide (Chapter B4-2, Project Standards)

Courtesy of:

Lisa Ryll

Tel: 212.745.9039

Dan Levitan
Tel: 212.318.9422

The Manhattan Mortgage Company
555 Madison Avenue, 14th Fl.,
New York, NY 10022

Feb 16, 2009

Manhattan (NY) Loan limits increased to $729,750

The House and Senate passed the stimulus package called the "American Recovery and Reinvestment Act of 2009" President Obama is expected to sign the bill tomorrow.

While many real estate professionals and home buyers were hoping for a $15,000 tax credit for all home buyers without income caps that was introduced in the Senate unfortunately the final bill only includes an $8000, tax credit for first time home buyers that earn less than $75,000 per year ($150,000 on a joint return).

  • Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
  • Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.
The bill includes a return to the higher temporary loan limits put in place for Fannie Mae, Freddie Mac and FHA. during 2008. In 2009 the limits went down to $625,000 for New York.

The bill allows Fannie Mae and Freddie Mac to once again purchase and guarantee loans of up to $729,750 in high-cost areas such as Manhattan. This applies to purchases after Jan 1, 2009 until December 1, 2009.

$729,750 is approximately 80% of $912,000. $729,750 is approximately 85% of $858,000. Most coops require a minimum of 20% down and although condos only require 10% down most lenders currently are requiring a minimum of 15% down.

Loans for more than $729,750 are called jumbo loans. Interest rates are much higher on jumbo loans. Because of the credit crises jumbo loans are harder to qualify for and rates are rising. Jumbo loans are not backed by the government they have been sold on the secondary market and there are less investors interested in them these days.

So while most buyers in Manhattan including first time buyers may not be eligible for the tax credit because of higher incomes in New York, the increase to the high conforming amount back to $729,750 will cost much less than a jumbo loan. Jumbo loans are currently difficult to acquire. High down payment (50%) are required on loans above $1 million.

To find out how much you qualify for click here for a free mortgage consultation and pre-approval.

Oct 3, 2008

Wells Fargo Buying Wachovia

Wells Fargo will buy Wachovia in a $15.1 billion all -stock deal. Wachovia previously had plans to sell to Citigroup. The Wells -Wachovia deal will be done without government assistance, while the Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp.

Currently Wells does not have retail branches in Manhattan but it has been one of the largest residential mortgage bankers in Manhattan. Wachovia recently opened new branches in Manhattan including a brand new bank on the Upper West side at 85th & Broadway.

Washington Mutual recently expanded retail branches throughout Manhattan when they acquired The Dime Savings Bank. Most likely JP Morgan Chase will close many Washington Mutual branches since Chase is already all over Manhattan. They closed many branches after they merged/ acquired Chemical and Manufacturers Hanover.

In recent years banks and drug store chains have been leasing most of the vacant retail space in Manhattan. Many vacant storefronts in Manhattan are covered with billboards. Over the billboards locals have written "NO MORE BANKS." I'm not sure if the current financial crises is what New Yorkers were wishing for.

Manhattan is constantly changing and reinventing itself. It is a place of perpetual motion. Never a dull moment as things change in a New York minute.

Qualified buyers click here to receive listings of Manhattan apartments and townhouses.

Click here for a consultation and pre-approval from Wells Fargo Home Mortgage.

Update: Citigroup wants to stop Wells Fargo from buying Wachovia. They are claiming exclusivity and are threatening to sue. Sour grapes? The Wells deal is better for Taxpayers. IMHO Citigroup is already too big for their britches and Wells Fargo is a much better bank. Stay Tuned.

Sep 15, 2007

Schumer wants to soften limits on Fannie, Freddie

Sen. Charles Schumer (D-N.Y.) proposed legislation last week to push up the caps on Fannie Mae and Freddie Mac's mortgage portfolios by a minimum of 10 percent for one year in an effort to ease the credit crunch.

Under the bill, 50 percent of the approximately $73 billion combined boost in their portfolios would be put toward refinancing subprime adjustable-rate mortgages into less costly loans; and the conforming loan limit would be raised to $625,000 in the priciest housing markets during the one-year period.

Though Schumer insists that "this is what Fannie and Freddie were designed for," such a move is opposed by the Bush administration as reported in Wall Street Journal (09/10/07) by Damian Paletta.

Naturally, the Bush administration would be against raising the conforming loan limit to $625,000 in the priciest housing markets. The priciest housing markets including Manhattan are in blue states.

While subprime has not been a big issue in affluent co-op dominated Manhattan, raising the conforming loan limit from $417,000 to $625,000 will help many qualified home buyers in NYC.

A buyer putting 20% down would be able to get a conforming loan on a $780,000 home vs the current $521,250 price cap.

Unfortunately $625,000 is still below the average price for a Manhattan apartment. Most Manhattan buyers seeking financing will still need the more expensive jumbo mortgages.

Aug 24, 2007

Manhattan Real Estate Market and Mortgage Update

It has been a busy year and summer. The busiest August I can remember. Manhattan has been very fortunate this year compared to the rest of the country. Our market continues to be very strong.

The fall out from the sub prime mortgage meltdown during the last several weeks is now affecting the mortgage, credit and financial services industries. The stock market has been volatile the feds added liquidity to the markets and lowered the prime rate.

It remains to be seen what affect this will have on the real estate market in Manhattan. We still have low inventory. Most of the inventory is in new construction and there seems to be plenty of buyers interested in new development condos.

However, borrowing will become harder for many buyers as lenders are tightening their criteria for loans. The mortgage industry will have layoffs, consolidation, mergers, take-overs and bankruptcies.

It is now more important than ever for buyers to be pre-approved and to have a commitment from a lender before they start apartment hunting. The first step in the home buying process involves a good lender who will determine how much the buyer is qualified to purchase.

My preferred lender is Wells Fargo Private Mortgage Banking. For a free consultation, pre-approval and commitment contact Glen Pedersen.

All CASH and large down payments will become more important terms for sellers. A couple of weeks ago when I told a sales agent for a new development that my buyer is ALL CASH the response was "they're all cash to us" I think that attitude will change on the part of sponsors selling pre-construction.

Eighteen months from now anything can happen. Someone qualified today might not qualify eighteen months from now. Wells Fargo has a loan product specifically for new construction that will lock in a rate for a year.

When I bought in a new development on the Upper West Side back in 1989 I had to be approved by citi bank the developers lender that financed the construction. I was able to get financing from any lender as long as I was approved by citi and if I couldn't get financing from another lender I had to go through with the citi loan. I shopped around and went with the Bowery Savings they later became Home Savings of America and then it ended up with Washington Mutual.

I think we will be seeing more of this type of requirement again from sponsors and perhaps listing agents. When I list a property I have Wells Fargo pre-appove the property and provide a financial analysis for potential buyers.

If major mortgage brokers are in trouble and will not be able to fund or close on loans, I will require buyers of my listings to at least be pre-approved by Wells just in case.

This blog site is designed and published as a consumer service by local real estate broker to help Manhattan, New York City buyers, sellers and renters make informed real estate decisions. This site and its feeds are owned and operated by Mitchell J Hall, a NY State licensed real estate associate broker associated with The Corcoran Group and member of the Real Estate Board of New York.

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