Refinancing: How Sweet It Is
We’ve had a 6 percent 30-Year fixed mortgage since we bought our house in 2005. With rates at historic lows, we, like many people, started looking into refinancing earlier in the year, but had to put it on hold until we got tax extensions, and then returns, filed. When we spoke with the mortgage specialist…
We’ve had a 6 percent 30-Year fixed mortgage since we bought our house in 2005. With rates at historic lows, we, like many people, started looking into refinancing earlier in the year, but had to put it on hold until we got tax extensions, and then returns, filed. When we spoke with the mortgage specialist at Chase in February the conforming loan limit for a two-family house in Brooklyn was just south of $800,000. When we got on the phone yesterday morning we were pleased to learn that the conforming limit had recently been raised to $934,200; the single-family limit is $729,750. We were able to do a 90-day lock for a 1/4 point at 5 percent. Here’s where you have to start to question how low prices can really go: With rates where they are right now, you could, say, buy a $1.2 million house and lock in mortgage payments of $5,000 a month; assume you make $1,500 on your rental and you’re down to $3,500; throw in the tax breaks and you’re down to $2,500; add back in $1,000 a month for taxes and insurance and you’re back up to $3,500. $3,500 a month to own your own house in New York City and have, say, 2,400 square feet of living space for yourself (three out of four floors). The trickier part comes when you need to finance more than that $934,200. Have any readers gotten financing for significantly more than that recently? How did you structure it? We heard from Chase that HELOCs are quite hard to get right now?
Thanks so much, IronBalls.
Curious: Do you think there is a disconnect between rents and mortgage payments in places such as Park Slope, Cobble Hill, etc.? I mean right here on this board (in this thread!) we have Jon, Wasder, etc., saying the $3500 or so they pay for their duplexes or triplexes is the same or less than they’d pay to rent an apartment and they get twice as much space. (That’s exactly what we’re thinking in Bushwick except we pay $1600 in rent and don’t want to pay more to own.)
Also, very curious about Section 8. How does it work? Someone on this board said if you accept Section 8 once you are obligated to always rent to Section 8. Is this true?
Thanks!
Mr. B,
What is your LTV? I am refinancing with Chase too and can’t seem to get better than 7/8th of a point with similar building to yours. My banker there insists I have the best possible rate and was surprised your points were so low. I am also a premier platinum customer.
Thx for sharing! gowanusgus at gmail.com!
Mopar,
The decline in rents is happening across the city.
I’m not familiar with rents in Bushwick, but I guess worst case you can count on Section 8 as long as your rental apartment is up to code.
The bottom line is that in the most desirable areas there’s a giant disconnect between rents and mortgage payments that is not sustainable. Prices have a long way still to fall before there’s even a semblance of parity with current rents.
It sounds like the purchase prices in Bushwick are so low, maybe buying there isn’t such a bad idea, especially since you’ll be living on site, but to be honest, low income neighborhoods tend to be difficult places to make money as a landlord, and I don’t invest in them because of rent collection issues.
“we didn’t mean to claim that the market WAS bottoming out”
But ya did. Whoops!
“What do you think is going to happen when rates go back up…”
Prices will be making distress calls, “MAYDAY MAYDAY!!!”
***Bid half off peak comps***
hey What,
Why are you so pissed off????
I’m willing to bet that Brownstoner will not go thru with his refi cause he looked at the numbers and he realizes that everything is OK now. He will just raise his family and pass his legacy on to his children..
The What
Someday this war is gonna end…
What:
I never considered myself a die hard member of team bull or team bear…i try to be somewhat objective…despite equities rallying i’m not feeling the over-all CNBC/Obama induced love that the general population feels towards the economy or SPX or even real estate….but i gotta ask…why r u such an incredible asshole ?? why r u so fucking miserable?? why don’t u just rent? or short banks? or short real estate? or jump off the bklyn bridge? –THE WHAAAAAT…SOMEDAY I”M GONNA GET A LIFE !!!!! jagoff
IronBalls, more details please. What neighborhoods, what rents, what do you believe will happen in the future?
And I’m curious what you think will happen with the subprime areas. Right now we’re counting on $1400 for a two or three bedroom rental (this is already down from $1600 rent in March). Otherwise we couldn’t afford to buy. (Houses are only $430,000 or so.)
This is Bushwick/Bedstuy/etc.
See what I mean?
The lawyer that did the CEMA was the bank attorney. MR, don’t hire a separate real estate lawyer for a refinance, you have to pay the bank’s lawyer and he will be doing the CEMA for you.