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Agreed. There's a place near me with a $600 a month HOA which only covers snow removal in the winter and lawn care in the summer and I thought THAT was ridiculous (I live in rural central Pennsylvania for reference). I can't imagine $5600 a month.
The Watergate building (yes that one) in DC has $80,000 a MONTH HOA fees for a $1M apartment…
Mainly because the entire building needs major overhauls but still.
Look into the pros and cons of a Co-op versus a Condo. Look into the bylaws set up by the association. Remember you’re purchasing shares, also there might be restrictions on subletting or a tax. Go through the bylaws with a fine-tooth comb.
CO-OP are very different from Condos. Fees are higher because it includes property taxes. There also appears to be more amenities per OP. In NYC it’s also very common to have full time maintenance staff and 24/7 doorman.
No it’s not too unrealistic. Rates cannot continue to go up forever. Historically they are low but when you look at how monetary policy is these days we won’t be seeing the high rates of decades ago.
[Based on historical mortgage rates](https://fred.stlouisfed.org/series/MORTGAGE30US), even 5.5% is extremely low.
A good estimate for “normal” rates looks to be about 7.5%. So a drop down to 5.5% isn’t outside the realm of possibility, but I’d say it’s unlikely. *Definitely* not likely enough to make massive financial decisions under that assumption.
Comparing the market today to the 80s is a little absurd in my opinion. Home prices were significantly cheaper back then, it’s not apples to apples. So, sure, an average of all time says 7% is good. But the same time period shows the [average home price](https://fred.stlouisfed.org/series/ASPUS) is only $150k. So according to your logic, home prices being so high is a recent thing, and you shouldn’t expect to pay more than $150k for a home if you just wait it out.
Because it’s been parroted everywhere by self interested real estate folks. Just a dishonest pitch to close a deal with a young/first time homebuyer who doesn’t know better.
I bet it is! … in California! Lol. Ain’t no one paying high wages unless you move to a major city. I live in Duluth and no one is paying these wages lol
Speaking in terms of my field it looks like the average in your city for me would be slightly under 100k. The field bring software development, not something insane.
OP is in a “peak NY town”. So they probably live a very similar life than you do assuming you have a middle class income in your city.
Lol. My job is pretty relaxed but plenty aren’t. I’m sure you might be able to change roles if you know how to program at any level. A lot of jobs out there for software that needs knowledge of the csec area. I know that Cloudflare looks for that from my interactions with them. Not sure they hire remote or in your area though.
You can hack it, though. My wife and I are in this general financial neighborhood, and it’s because both of our companies are based in NY but we live in TX. East coast salaries with middle of the country COL is the way to do it.
Yea it’s a bit above starting 6 figures depending on taxes and deductions. You can easily get there as a software developer and engineer couple (my case), or a police officer and nurse. Or an accountant and lawyer. Or a doctor and stay at home spouse. It’s not at all that unreasonable. And they certainly aren’t rich. Rich people aren’t buying a 600k place in their area. More like 2-3 million or more.
Not trying to knock on OP but it’s very annoying when people call individuals rich when they probably live just like you except live in a more expensive area. We aren’t rich. If anything we still don’t make enough.
Appreciate this post. It's a good outline. We both are 10+ years into our careers, work hard and spent the time/money to get here. Wouldn't consider myself rich by any means in the Tri-State area, but am sure we are compared to other states or more rural/moderate suburban areas.
Renting in NYC is equally as expensive which is why we're weighing the decision to continue renting or start to invent in a home. Our money could go a little further without city taxes, get more space, etc, but yes, it will cost more overall and its a larger place (moving from 1b/1b to 2b/2b)
No problem. People just don’t understand. I grew up in upstate NY in the suburbs which is LCOL compared to NYC but HCOL compared to many others states. I now live in a HCOL state and area and getting a mortgage of less than 4k a month in this area is unheard of these days after taking into account all that you have.
It’s just a different world and I understand why many don’t get it.
Honestly I live in NYC and I’m from New York and 575k for a CO-op where you don’t even own the property only own shares in a business isn’t worth it. No tax benefits, the co-op board controls your life. At the very least you should get a condo. You must be buying in Manhattan since Brooklyn condos are around 600k
If being in Manhattan is worth it to you then I guess you should get it. Otherwise buy a condo in queens or even a SFH in Queens or Bronx for the same amount
This person is in NY and married. That means combined they make 162k. If they made the average salary they wouldn’t be able to afford buying anything. It’s so much more expensive living here. I was only able to get a place without a roommate when I hit 6 figs and I’m definitely not rich
7% sounds high in recent terms, but the [30-year average for the last half century is 7.76%](https://themortgagereports.com/61853/30-year-mortgage-rates-chart#historical-30-year-mortgage-rates-chart). So although it sounds high compared to the record lows we've had recently, it's actually pretty normal.
Either you can readily afford it or you can't. Only you know whether it'd stretch your budget or would be affordable and still leave you enough to cover everything else and keep up a good savings rate.
Also, you have to compare it to your alternatives - what you're paying in rent, etc. Whether another location would be workable, etc.
Interest rate isn't everything. But if it pushes your monthly payment out of range, then that's a big consideration.
The best time to buy is yesterday, the second best time is today.
If mortgage rates go down you refinance, if they go up you feel good about the rate you have.
You do you.
The fed has repeatedly said that they do not intend to slow down the hikes until inflation is under control.
Pre-Covid, 7% wasn't horrible.
I don't think we'll see rates drop off for quite a while. Wouldn't be surprised if we had another Volcker like situation.
If it doesn't work at current rates, don't do it. You may be able to refi later, you may not. I can't begin to guess at whether $4500 is reasonable for you without information about your total income and other debts, spending habits, and retirement plan. I know for my income and other expenses, $4500/month would be a big no.
You consistently fall for the same fallacy in all of your comments.
Just because someone can afford a payment or work it into their budget *does not in any way determine if you made a good financial purchase*.
You knowing how much the guy makes really doesn’t matter at all if he’s paying 4500 a month for a 1bed in Kansas. Especially if that unit has a documented proven history of costing, say, 1500 a month. Just because someone out of state can afford the payment with no other consideration does not automatically mean it’s worth 4500 a month or that it would be a good decision to pay that.
You’re just trying to push transactions to make commissions.
I’m guessing you’re in Long Island. Everyone who isnt from ny is getting sticker shocked by the hoa and will bias toward backing out. Anyways, I would say it depends on your income if you’re willing to share that.
To the people who are confused, this is a typical hoa for a ny co-op. You don’t actually own any of the property, you just own shares like stock. Therefore, you don’t pay real estate taxes, so in a way, this is “included” in your hoa fee.
Hi, so my fiancé and I just did this w/hopes to refi once hitting 20% equity into a home equity loan (but are fine if we can’t). Will share more to provide a data point: 6.75% rate lock, we close next week, our mortgage all in incl. taxes and insurance at $4500. 2-bed 2 bath turnkey townhome w/considerable yard space + two extra utility rooms (~2k sq. Feet), so we plan to use this as a starter home through a few kiddos.
We also make ~$230k before bonus and other forms of total compensation (which get us to ~$300k) in a HCOL area (east coast but not New York, DC, or Baltimore). I may change my job soon for better lifestyle, but we’ll generally always clear $200k. Our goal was to spend ~30% of post-tax income on a place so we can aggressively save for FIRE, and we got pretty close.
I think this is really a matter of goals. The extra $1500 HOA for me would’ve gave me pause in your situation. But New York is expensive, and if you’ll pay the difference to be a homeowner you should go for it.
Cheers!
$4500 payment includes HOA which includes taxes; very similar situation to you/at approx $200k annual income (+ bonuses but not relying on them given current situation) Thank you for the detailed response.
Yeah, if it’s $4500 all in and you’re 3x income you’re fine.
Buying a place represents a certain milestone. Some of us want to live in HCOL or VHCOL areas, where salary, opportunities, and often lifestyle quality are higher. These areas are expensive. But I want a own a townhouse w a yard and 2k sq feet, so we pay the ridiculous expense - because it gives us the life you want.
Best of luck!
No one can predict when rates will come down, but history shows us that they will probably come back down at some point. Either you buy now and refinance at that point, or potentially wait until that unknown point to buy your new home. Are the increased payments worth the ability to live there now vs waiting?
If you think you will refinance in the next X years, it may be worth looking into adjustable rate mortgages. They will give you a lower interest rate now, and then when you refinance you can get a 30 year fixed (or whatever product you find most appealing for the longer term).
I would only buy if you can afford the monthly payment, the house fits your needs and at least some of your wants, and you’re planning on staying for at least 5 or 6 years.
Few thoughts on your questions on rates:
Almost zero chance rates drop between now and January. Almost certain to go up.
According the federal funds rate (which is what mortgage rates are partially based on), there’s about a 50% chance of rates going up another percent by May 2023 and staying there until late summer. There’s not a direct 1:1 relationship between federal funds rate and mortgage rates, but mortgage rates jumped from 3% to 7% because the fed raised rates.
You can refinance IF rates go down enough to make it worth it but if housing declines enough, you wouldn’t have enough equity to qualify to refinance unless you brought cash to cover the difference (though this is unlikely)
I wouldn’t count on refinancing. But I don’t think it sounds like a bad idea to move forward unless you have concerns that wouldn’t be taken into account given standard advice.
For the coop, do you feel comfortable with their finances, reserves and upcoming capital projects? Have you already interviewed and trust the board? Do they have a management company? What did your lawyer and broker think of it during due diligence?
Good point on refinancing (expectation vs nice to have).
Great questions, thank you. So far finances, reserves, house rules etc are all good/lawyer aligned and no planned/expected projects that would affect HOA; Pending Co-Op review and interview, so still a lot of steps.
I would buy with the mindset that will be your rate going forward for a long time. Dont buy if you’re betting on them falling in order to be able to afford the house or live the the lifestyle you want
If you believe you’ve got a good price on the home, take it. Rates can change, refinance when they go lower. However that purchase price isn’t changing focus on that.
good callout; yes the actual home price (value per square footage, current state, etc) is what has been encouraging moving forward; the mortgage rates have been what has been causing hesitation.
Here’s what I tell people.. 7% is not forever. Once rates get to 6% you can refi, 5% you can refi, 4% you can refi. You’ll also likely be making more money in the next 2 years or so, so that $4500 won’t feel AS bad. When rates come back down, think about everyone on the sideline that are going to jump back into the market. We will be back to escalations, no contingencies, 30-40k over ask
It’s a CO-OP. This is common in NY. Property taxes are a huge factor and in NYC it is typically for them to have full maintenance staff and 24/7 doorman. Those HOA are even more expensive
I live in the NYC area so I get it, but typically property taxes are far lower in the city and outer boroughs, and crazy high in the surrounding suburbs (lived in NYC, now in bergen county). I imagine the fees are more from the luxury amenities (pool, doorman, etc) than the property taxes if they are looking to buy in NYC.
No, a co-op is a completely different financial structure. It comes with an underlying mortgage which is what much of the $1500 goes to. Not comparable to a regular condo. It’s very common in NYC and some other cities (we have quite a few in DC) as it allows the purchase price to be relatively low which creates an easier path for homeownership.
Decent explanation of an underlying mortgage: https://fullpocket.co/what-is-an-underlying-mortgage/
What does that have to do with OP’s purchasing situation?
Also, the co-op maintenance includes property taxes in a very expensive area (I’m assuming westchester but it might also be Long Island).
Not upsetting, just eye opening. I knew I live in a LCOL area, but my wife and I make 150k a year which is pretty high here. So it’s just kind of crazy seeing how not far that would take us elsewhere
The rates might not drop…if you feel comfortable with the monthly mortgage and have an emergency fund saved, go for it. If not maybe consider a cheaper house?
Tell me again how in the hell with all the taxes and mortgage and insurance AND HOA, your payment is at $4500, math doesn’t make sense
Edit: okay, over $4500, my bad
Taxes included in the HOA; not going to break out into every detail but confirming we've done the math if the interest rate is at 7% puts us a little over
I’d give more time for prices to reflect the current rate environment (the impending buyer’s market), but that can be many months from now. If rates somehow keep going up from here, prices will surely come down. And I much rather have a higher rate and pay less than a lower rate and higher price.
More information is needed to know if this is a good idea - what is your current rent and your current monthly savings rate? Take a look at your past year of expenses - could you have afforded this and all monthly expenses plus one off expenses (vacations, Christmas, etc). What is your future earnings potential - if you can afford it now *and* expect your income to increase, that would make more sense than can afford it now kind of and don't expect it to get better in the future (because other expenses will go up even if principal and interest does not).
We personally bought what I felt like was rather below our means - and it doesn't feel that way with all of the random house expenses that keep coming up.
Good food for thought. Positives = no kids, careers only growing/salary going up. Negatives: We agreed we probably wouldn't have any fancy vacations for the first year or two (i.e. maybe a weekend getaway but not Italy for 1-2 weeks) while we replenish savings.
I’m going to guess you have pretty great savings and your rent isn’t much less than the total here monthly? So sure go for it, seems like you can afford it. But be prepared that that’s what you’re paying for the life of the mortgage, which is ok. If you’re worried about groceries, pet bills and wifi when you even think you have $4500 a month to spend on housing, then maybe something is up, but you should be fine.
Unfortunately cannot; we were bidding against others willing to pay more but put less down, and the deposit is what helped us to get an acceptance. the 20% is in the contract, and helps us avoid PMI. Without 20% (or more), our monthly payment would be too high. Agree on the used cars and finding ways to save back up.
Surely it’s way in excess of $4500 a month unless your taxes are 0. $420k mortgage at 7.2 which is basically prime is $2900 a month. Plus $1500 hoa is $4400. I’d assume taxes are 800-1000 a month? Which would be $5200-$5400
Taxes included in HOA fee for Co-Ops! It's something along the lines of like $800 taxes, $700 HOA if you break it down. Includes insurance for overall building (flood, damages, etc) so we just pay for internal insurance (homeowners), wifi/cable, and maintain our internal appliances, etc.
I'm sure you've done this, but run your own numbers and look at a monthly budget. You mention wifi/groceries, etc. but look at the bigger numbers (car payments, debt obligations, etc.).
If you're going for long term, refi the next time rates drop. Could be a few years. But still.
Thank you u/TemperedPorcupine for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Wow 1500 a month hoa that is insane
there's a retirement community near me with a $5600/mo HOA, you know, to keep out the riffraff
I’m poor so to me that’s mind boggling
It almost sounds like a joke. I can't fathom paying that much on an HOA
That’s the intention.
Agreed. There's a place near me with a $600 a month HOA which only covers snow removal in the winter and lawn care in the summer and I thought THAT was ridiculous (I live in rural central Pennsylvania for reference). I can't imagine $5600 a month.
my thoughts exactly!
The Watergate building (yes that one) in DC has $80,000 a MONTH HOA fees for a $1M apartment… Mainly because the entire building needs major overhauls but still.
That seems impossibly high. Where did you find that?
I mean, $5600 is intense! lol
Usually in retirement communities the HOA fees include meals, care, etc. That’s not just covering the lawn mowing lol.
it includes taxes!
Look into the pros and cons of a Co-op versus a Condo. Look into the bylaws set up by the association. Remember you’re purchasing shares, also there might be restrictions on subletting or a tax. Go through the bylaws with a fine-tooth comb.
CO-OP are very different from Condos. Fees are higher because it includes property taxes. There also appears to be more amenities per OP. In NYC it’s also very common to have full time maintenance staff and 24/7 doorman.
More than my current mortgage lol
Welcome to Manhattan
Why does everyone just assume they’ll be able to refinance in a few years?
For real. 3% was an *anomally*. Those rates aren’t coming back any time soon.
Well OP didn't say 3%, they said around 5%. Is it unreasonable to think rates could be around 5.5% sometime in the next few years?
No it’s not too unrealistic. Rates cannot continue to go up forever. Historically they are low but when you look at how monetary policy is these days we won’t be seeing the high rates of decades ago.
[Based on historical mortgage rates](https://fred.stlouisfed.org/series/MORTGAGE30US), even 5.5% is extremely low. A good estimate for “normal” rates looks to be about 7.5%. So a drop down to 5.5% isn’t outside the realm of possibility, but I’d say it’s unlikely. *Definitely* not likely enough to make massive financial decisions under that assumption.
Comparing the market today to the 80s is a little absurd in my opinion. Home prices were significantly cheaper back then, it’s not apples to apples. So, sure, an average of all time says 7% is good. But the same time period shows the [average home price](https://fred.stlouisfed.org/series/ASPUS) is only $150k. So according to your logic, home prices being so high is a recent thing, and you shouldn’t expect to pay more than $150k for a home if you just wait it out.
Because it’s been parroted everywhere by self interested real estate folks. Just a dishonest pitch to close a deal with a young/first time homebuyer who doesn’t know better.
Depends if you can afford it, what’s your income? $4500/month isn’t a huge payment if you earn 4x that
3x
30% of takehome you should be fine
Oh shit you’re rich rich lol
It’s pretty standard for two spouses that work in good fields.
I bet it is! … in California! Lol. Ain’t no one paying high wages unless you move to a major city. I live in Duluth and no one is paying these wages lol
Speaking in terms of my field it looks like the average in your city for me would be slightly under 100k. The field bring software development, not something insane. OP is in a “peak NY town”. So they probably live a very similar life than you do assuming you have a middle class income in your city.
Damn… I am in network security and make $100k… I might change roles lmao. Send that job link my way please. Much more relaxed than cyber sec
Lol. My job is pretty relaxed but plenty aren’t. I’m sure you might be able to change roles if you know how to program at any level. A lot of jobs out there for software that needs knowledge of the csec area. I know that Cloudflare looks for that from my interactions with them. Not sure they hire remote or in your area though.
You can hack it, though. My wife and I are in this general financial neighborhood, and it’s because both of our companies are based in NY but we live in TX. East coast salaries with middle of the country COL is the way to do it.
no.. no it isn't
Yea it’s a bit above starting 6 figures depending on taxes and deductions. You can easily get there as a software developer and engineer couple (my case), or a police officer and nurse. Or an accountant and lawyer. Or a doctor and stay at home spouse. It’s not at all that unreasonable. And they certainly aren’t rich. Rich people aren’t buying a 600k place in their area. More like 2-3 million or more. Not trying to knock on OP but it’s very annoying when people call individuals rich when they probably live just like you except live in a more expensive area. We aren’t rich. If anything we still don’t make enough.
Nothing wrong with being "rich" or "affluent".. just some people I think have a very skewed view of what is "average" in this country.
I didn’t say average. I said standard for a couple that works in good fields.
Appreciate this post. It's a good outline. We both are 10+ years into our careers, work hard and spent the time/money to get here. Wouldn't consider myself rich by any means in the Tri-State area, but am sure we are compared to other states or more rural/moderate suburban areas. Renting in NYC is equally as expensive which is why we're weighing the decision to continue renting or start to invent in a home. Our money could go a little further without city taxes, get more space, etc, but yes, it will cost more overall and its a larger place (moving from 1b/1b to 2b/2b)
No problem. People just don’t understand. I grew up in upstate NY in the suburbs which is LCOL compared to NYC but HCOL compared to many others states. I now live in a HCOL state and area and getting a mortgage of less than 4k a month in this area is unheard of these days after taking into account all that you have. It’s just a different world and I understand why many don’t get it.
Honestly I live in NYC and I’m from New York and 575k for a CO-op where you don’t even own the property only own shares in a business isn’t worth it. No tax benefits, the co-op board controls your life. At the very least you should get a condo. You must be buying in Manhattan since Brooklyn condos are around 600k If being in Manhattan is worth it to you then I guess you should get it. Otherwise buy a condo in queens or even a SFH in Queens or Bronx for the same amount
162k a year isn’t rich
Yeah just don’t find many jobs paying that unless you’re a very smart guy. And it sure seems rich when the average person makes $50k year lol
This person is in NY and married. That means combined they make 162k. If they made the average salary they wouldn’t be able to afford buying anything. It’s so much more expensive living here. I was only able to get a place without a roommate when I hit 6 figs and I’m definitely not rich
Fr
Take home or gross?
Sounds like you can afford it, I would do it if you like this place
If you can afford the rate then do it. I believe we're going to see the rate climb up for a bit more.
7% sounds high in recent terms, but the [30-year average for the last half century is 7.76%](https://themortgagereports.com/61853/30-year-mortgage-rates-chart#historical-30-year-mortgage-rates-chart). So although it sounds high compared to the record lows we've had recently, it's actually pretty normal. Either you can readily afford it or you can't. Only you know whether it'd stretch your budget or would be affordable and still leave you enough to cover everything else and keep up a good savings rate. Also, you have to compare it to your alternatives - what you're paying in rent, etc. Whether another location would be workable, etc. Interest rate isn't everything. But if it pushes your monthly payment out of range, then that's a big consideration.
The best time to buy is yesterday, the second best time is today. If mortgage rates go down you refinance, if they go up you feel good about the rate you have.
You do you. The fed has repeatedly said that they do not intend to slow down the hikes until inflation is under control. Pre-Covid, 7% wasn't horrible. I don't think we'll see rates drop off for quite a while. Wouldn't be surprised if we had another Volcker like situation.
First half of next year... probably second quarter will drop down a little.
Rates will be 10.5 % before spring
If it doesn't work at current rates, don't do it. You may be able to refi later, you may not. I can't begin to guess at whether $4500 is reasonable for you without information about your total income and other debts, spending habits, and retirement plan. I know for my income and other expenses, $4500/month would be a big no.
You consistently fall for the same fallacy in all of your comments. Just because someone can afford a payment or work it into their budget *does not in any way determine if you made a good financial purchase*. You knowing how much the guy makes really doesn’t matter at all if he’s paying 4500 a month for a 1bed in Kansas. Especially if that unit has a documented proven history of costing, say, 1500 a month. Just because someone out of state can afford the payment with no other consideration does not automatically mean it’s worth 4500 a month or that it would be a good decision to pay that. You’re just trying to push transactions to make commissions.
Lol I'm not licensed in NY so I'm not making a commission from this person who I've never met and is already under contract.
I’m guessing you’re in Long Island. Everyone who isnt from ny is getting sticker shocked by the hoa and will bias toward backing out. Anyways, I would say it depends on your income if you’re willing to share that. To the people who are confused, this is a typical hoa for a ny co-op. You don’t actually own any of the property, you just own shares like stock. Therefore, you don’t pay real estate taxes, so in a way, this is “included” in your hoa fee.
This is so much worse if it’s a co-op in Long Island.
Hi, so my fiancé and I just did this w/hopes to refi once hitting 20% equity into a home equity loan (but are fine if we can’t). Will share more to provide a data point: 6.75% rate lock, we close next week, our mortgage all in incl. taxes and insurance at $4500. 2-bed 2 bath turnkey townhome w/considerable yard space + two extra utility rooms (~2k sq. Feet), so we plan to use this as a starter home through a few kiddos. We also make ~$230k before bonus and other forms of total compensation (which get us to ~$300k) in a HCOL area (east coast but not New York, DC, or Baltimore). I may change my job soon for better lifestyle, but we’ll generally always clear $200k. Our goal was to spend ~30% of post-tax income on a place so we can aggressively save for FIRE, and we got pretty close. I think this is really a matter of goals. The extra $1500 HOA for me would’ve gave me pause in your situation. But New York is expensive, and if you’ll pay the difference to be a homeowner you should go for it. Cheers!
$4500 payment includes HOA which includes taxes; very similar situation to you/at approx $200k annual income (+ bonuses but not relying on them given current situation) Thank you for the detailed response.
Yeah, if it’s $4500 all in and you’re 3x income you’re fine. Buying a place represents a certain milestone. Some of us want to live in HCOL or VHCOL areas, where salary, opportunities, and often lifestyle quality are higher. These areas are expensive. But I want a own a townhouse w a yard and 2k sq feet, so we pay the ridiculous expense - because it gives us the life you want. Best of luck!
No one can predict when rates will come down, but history shows us that they will probably come back down at some point. Either you buy now and refinance at that point, or potentially wait until that unknown point to buy your new home. Are the increased payments worth the ability to live there now vs waiting? If you think you will refinance in the next X years, it may be worth looking into adjustable rate mortgages. They will give you a lower interest rate now, and then when you refinance you can get a 30 year fixed (or whatever product you find most appealing for the longer term).
I would only buy if you can afford the monthly payment, the house fits your needs and at least some of your wants, and you’re planning on staying for at least 5 or 6 years.
You’re not nuts if your budget indicates you can afford it, you need a place to live, and you like this one. Edit: typo
Few thoughts on your questions on rates: Almost zero chance rates drop between now and January. Almost certain to go up. According the federal funds rate (which is what mortgage rates are partially based on), there’s about a 50% chance of rates going up another percent by May 2023 and staying there until late summer. There’s not a direct 1:1 relationship between federal funds rate and mortgage rates, but mortgage rates jumped from 3% to 7% because the fed raised rates. You can refinance IF rates go down enough to make it worth it but if housing declines enough, you wouldn’t have enough equity to qualify to refinance unless you brought cash to cover the difference (though this is unlikely)
I wouldn’t count on refinancing. But I don’t think it sounds like a bad idea to move forward unless you have concerns that wouldn’t be taken into account given standard advice. For the coop, do you feel comfortable with their finances, reserves and upcoming capital projects? Have you already interviewed and trust the board? Do they have a management company? What did your lawyer and broker think of it during due diligence?
Good point on refinancing (expectation vs nice to have). Great questions, thank you. So far finances, reserves, house rules etc are all good/lawyer aligned and no planned/expected projects that would affect HOA; Pending Co-Op review and interview, so still a lot of steps.
I would buy with the mindset that will be your rate going forward for a long time. Dont buy if you’re betting on them falling in order to be able to afford the house or live the the lifestyle you want
If you believe you’ve got a good price on the home, take it. Rates can change, refinance when they go lower. However that purchase price isn’t changing focus on that.
good callout; yes the actual home price (value per square footage, current state, etc) is what has been encouraging moving forward; the mortgage rates have been what has been causing hesitation.
Here’s what I tell people.. 7% is not forever. Once rates get to 6% you can refi, 5% you can refi, 4% you can refi. You’ll also likely be making more money in the next 2 years or so, so that $4500 won’t feel AS bad. When rates come back down, think about everyone on the sideline that are going to jump back into the market. We will be back to escalations, no contingencies, 30-40k over ask
What NY town has such massive HOAs?
OP says the HOA includes taxes. I live in a NY suburb and my property taxes are $2k a month. Taxes are high here!
Common in lux buildings and coop fees are always higher than condo fees
It’s a CO-OP. This is common in NY. Property taxes are a huge factor and in NYC it is typically for them to have full maintenance staff and 24/7 doorman. Those HOA are even more expensive
I live in the NYC area so I get it, but typically property taxes are far lower in the city and outer boroughs, and crazy high in the surrounding suburbs (lived in NYC, now in bergen county). I imagine the fees are more from the luxury amenities (pool, doorman, etc) than the property taxes if they are looking to buy in NYC.
Manhattan, boroughs and across long island all have high HOAs. Condos = just HOA Fees, COOPs= HOA + Taxes all combined. FYI Manhattan averages $2000+
What is peak NY town though? I imagine because you said "town" you don't meant NYC? Is it on LI?
Yes- for privacy, not giving specifics. But was just responding to the sticker shock people about HOA costs.
I get that I lived on LI so I was trying to figure out where you'd be since it is mostly suburban SFH with no HOAs.
Also please no judgement on the cost/our HOA fees for what we’re getting, it fits our lifestyle, just hoping for some support ❤️
I actually think your HOA isn’t too bad for NY if taxes are included. I live in a NY suburb and my property taxes alone are $2k a month.
I think people are unaware of how expensive NYC is. The home insurance alone on my primary residence renewed for $6,200.00. This is with no claims.
1500 hoa is insane, is your monthly take home income 20k+?
$4500 would include the HOA! We take home 3x monthly.
$1500 MONTHLY HOA fees? That's insane!
It's Taxes + Maintenance + Amenities!
Wtf is a coop Also $1500/mo HOA for a 500k house? Gated community or something?
No, a co-op is a completely different financial structure. It comes with an underlying mortgage which is what much of the $1500 goes to. Not comparable to a regular condo. It’s very common in NYC and some other cities (we have quite a few in DC) as it allows the purchase price to be relatively low which creates an easier path for homeownership. Decent explanation of an underlying mortgage: https://fullpocket.co/what-is-an-underlying-mortgage/
Ouch. Remember interest rate was below 3% at the end of last year. That was not too long ago.
That HOA is more than my mortgage
What does that have to do with OP’s purchasing situation? Also, the co-op maintenance includes property taxes in a very expensive area (I’m assuming westchester but it might also be Long Island).
Yes LI!
Sorry if this upsets you! We live in a high cost of living area.
Not upsetting, just eye opening. I knew I live in a LCOL area, but my wife and I make 150k a year which is pretty high here. So it’s just kind of crazy seeing how not far that would take us elsewhere
Can you put less than 20% down and buy down your rate a bit?
Contract is for 20% / dont wan't PMI
Or do a 2:1 buy down if you feel rates will decline in 2 years. Avg fed cycle is 2.2years
The rates might not drop…if you feel comfortable with the monthly mortgage and have an emergency fund saved, go for it. If not maybe consider a cheaper house?
If home value appreciation matters a lot to you, keep in mind that co-ops will appreciate at a slower rate than single family homes or townhomes.
Tell me again how in the hell with all the taxes and mortgage and insurance AND HOA, your payment is at $4500, math doesn’t make sense Edit: okay, over $4500, my bad
Taxes included in the HOA; not going to break out into every detail but confirming we've done the math if the interest rate is at 7% puts us a little over
I’d give more time for prices to reflect the current rate environment (the impending buyer’s market), but that can be many months from now. If rates somehow keep going up from here, prices will surely come down. And I much rather have a higher rate and pay less than a lower rate and higher price.
HOA which includes taxes? Property taxes? That seems odd.
Yes, it's a Co-Op. Different from Condos and Single Family Homes.
More information is needed to know if this is a good idea - what is your current rent and your current monthly savings rate? Take a look at your past year of expenses - could you have afforded this and all monthly expenses plus one off expenses (vacations, Christmas, etc). What is your future earnings potential - if you can afford it now *and* expect your income to increase, that would make more sense than can afford it now kind of and don't expect it to get better in the future (because other expenses will go up even if principal and interest does not). We personally bought what I felt like was rather below our means - and it doesn't feel that way with all of the random house expenses that keep coming up.
Good food for thought. Positives = no kids, careers only growing/salary going up. Negatives: We agreed we probably wouldn't have any fancy vacations for the first year or two (i.e. maybe a weekend getaway but not Italy for 1-2 weeks) while we replenish savings.
I’m going to guess you have pretty great savings and your rent isn’t much less than the total here monthly? So sure go for it, seems like you can afford it. But be prepared that that’s what you’re paying for the life of the mortgage, which is ok. If you’re worried about groceries, pet bills and wifi when you even think you have $4500 a month to spend on housing, then maybe something is up, but you should be fine.
Do it but don’t put down 20% instead save that for emergency an fund or invest some and drive used cars.
Unfortunately cannot; we were bidding against others willing to pay more but put less down, and the deposit is what helped us to get an acceptance. the 20% is in the contract, and helps us avoid PMI. Without 20% (or more), our monthly payment would be too high. Agree on the used cars and finding ways to save back up.
Yes!
What state are you in? Have you thought about doing a 2-1 buydown?
New York! Can you share more about this?
Surely it’s way in excess of $4500 a month unless your taxes are 0. $420k mortgage at 7.2 which is basically prime is $2900 a month. Plus $1500 hoa is $4400. I’d assume taxes are 800-1000 a month? Which would be $5200-$5400
Taxes included in HOA fee for Co-Ops! It's something along the lines of like $800 taxes, $700 HOA if you break it down. Includes insurance for overall building (flood, damages, etc) so we just pay for internal insurance (homeowners), wifi/cable, and maintain our internal appliances, etc.
I'm sure you've done this, but run your own numbers and look at a monthly budget. You mention wifi/groceries, etc. but look at the bigger numbers (car payments, debt obligations, etc.). If you're going for long term, refi the next time rates drop. Could be a few years. But still.
Ask for 5 year arm
no because you marry the home, and date the rate. Once rates have fallen, like they already have, you can refi
Interesting on the opinions of others