What does it cost to live in NYC?

^{What does it cost to live in NYC?}

^{There are so many factors that go into a home purchase—especially if you’re a first-time buyer. What is the right time? How much money should I put down? How do I know what my budget really is?}

^{A lot of things can impact when the right time is, but it’s less about the market and more about your needs and what your financial goals are. Sometimes it’s not just about your interest rate, but rather what the carrying costs are and what it means to you to own property.}

^{What’s the first step?}

^{Are you paying in cash or planning to finance? Once you’ve made the decision to start looking at owning property, the next thing you need to do is figure out what you’re able to pay for on a monthly basis. With interest rates being over 6% (the latest Fed update indicating they may even be close to 7%), this makes your monthly payments (if you choose to finance) dependent on the rate you get and how you choose to set up your mortgage payments. Let’s discuss what it really means to afford to have a mortgage:}

^{A big factor to consider:}

^{What is the building’s maintenance or HOA? Does it include the property taxes? (With a co-op, building maintenance includes property taxes.)}

^{The loan amount you are able to take out from a mortgage is dependent on those monthly payments. If rates are higher, the payment for the mortgage is higher, so the amount you’re able to take out on a loan therefore is dependent on the monthly maintenance or HOA on a building. $500 or $1,000 more in monthly maintenance on a building could impact your loan amount by a few hundred thousand dollars.}

^{How much are you able to put down?}

^{A lot of buildings in NYC require at least a 20% down payment, but unless you have additional assets and liquidity, having just that amount does not always give you the ability to start the process. In NYC, condos generally have a bit more flexibility on what you can put down, and co-ops have pretty strict guidelines and sometimes require even 25%–50% down on units in their buildings. Condos can be as low as 10%. In addition to that, you’ll need to show “post-close liquidity,” which means available funds equivalent to whatever that monthly payment (maintenance/HOA + monthly mortgage) is for 2 years.}

^{For some quick math, we can do a quick estimated calculation based on a $1,000,000 co-op that requires a 20% down payment and needs 2 years of post-close liquidity:}

^{Down payment - $200,000
Loan amount - $800,000
HOA - $1,000}

• ^{Monthly payment on loan - $6,000 (estimated) + $1,000 (HOA/maintenance) = $7,000 monthly.}

• ^{$7,000 x 24 (months) = $168,000 in post-close liquidity required.}

• ^{Available funds to purchase: $200,000 + $168,000 = $368,000 required to be able to afford a $1,000,000 co-op in NYC with this very basic example.}

^{Some additional costs that go into purchasing a home include attorney fees, closing costs to the building, transfer taxes, insurance, etc.}

^{While your affordability is based on this monthly payment and requirement of liquidity, the decision to own comes with the decision to start building equity. You can expand, renovate, change, and really make owning property into an investment.}

^{If you have questions about your ability to afford a home, want to discuss a plan to be able to afford a home in the future, or want to talk about options that could be unconventional ways to purchase, our team is here to help discuss, plan, and execute whatever makes sense for you.}