News Update

Mortgage Rates Drop in First Week of January

After steadily rising for the month of December, the 30-year fixed-rate mortgage averaged 5.09% for the week ending January 7, down from last week's 5.14% average. The mortgage averaged 5.01% a year ago. Fifteen-year fixed-rate mortgages averaged 4.50%, down from 4.54% last week and 4.62% a year ago.

“Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year," said Frank Nothaft, Freddie Mac chief economist, in a news release. ARM rates will rise as the economy strengthens and the Federal Reserve decides to raise its overnight target rate, Nothaft added. "However, the federal funds futures market does not anticipate any Fed action until the second half of 2010."

Apartment Rents Down in Fourth Quarter 2009

In New York City, the vacancy rate improved by 0.1 percentage point for the second straight quarter, but around 60% of rental buildings dropped their rents in the fourth quarter from the previous quarter. Effective rents, including concessions such as one month of free rent, fell 5.6% in New York in 2009.

Thanks to falling home prices and record low mortgage rates, it now costs less to own than it has in the past decade on a mortgage-payment-to-rent basis. But falling rents throughout the country are expected to offset some of the recent improvement in affordability, making renting more attractive than owning in some US markets. Low prices have made Manhattan a buyers market over the past few months, so take advantage of this opportunity to buy a new home while the market is still on your side.

Contact Alfred Real Estate today.

Tenants of Rent-Stabilized Apartments: The Newest Homebuyers?

Rent-stabilized tenants appear to be the newest addition to the ranks of new homebuyers. In New York City, nearly 70 percent of the population rents — about double the rate for the rest of the country. Most New Yorkers don’t take the decision to rent lightly. However, since home prices in New York have dropped as much as 30 percent since the height of the real estate boom, even people who are paying way under market rates for their rentals are venturing into the housing market.

The Times' lead-off anecdote is a retired school teacher who is trading a $725/month East Village studio for a $305,000 studio in a doorman building on the Upper West Side. Even though he and other buyers making the transition from stabilized renting to owning will end up paying more than they do now, most are certain it beats renting at market-rate.

Those who decide to leave rent-stabilized apartment know that they will probably wind up paying more, but they have some very compelling reasons for leaving the security of their rented abodes. Some have the desire to upgrade to a nicer building or a larger space while others give up size for the experience of owning. There are some who make the move because they know that their rents will soon head into market-rate territory anyway. Despite sharing other secondary motives, their main incentive is sales prices that have been heftily discounted and mortgage rates that are hovering enticingly low at around 5 percent.

Market experts say there is a chance that prices may drop slightly over the next quarter, however now is probably as good a time as ever to buy. Even if buyers aren’t getting a rock-bottom price, prices have come down substantially and buyers will get a good, reasonable deal at very low mortgage rates.

Contact Alfred Real Estate today.

The Buyer's Guide to Preparing a Board Package

When purchasing a co-op apartment, you will be required to complete a purchase application and assembling a board package—a comprehensive presentation of financial documents and references. The main purpose of the board package is to guarantee the corporation of your financial ability to support the apartment and to give them confidence that you will be a “cooperative” shareholder and welcomed member of their community.

Each co-op has its own set of requirements and application forms, which Alfred Real Estate will obtain for you from the managing agent of the building. The package will most likely consist of:
Purchase Application: This should be typed. Fill in all blanks and answer all questions (fill in “not applicable” when necessary).

Credit Release Form: This allows the managing agent to obtain a credit check for each applicant.

Financial Statement: This is a statement of all assets and liabilities and supporting documents. The sums on the statement must reconcile with the attached supporting documents. Every item on the statement (except personal property) must be documented. Don't forget to add earnest money (deposit on contract) in the asset column.

Reference Letters: You will be asked to provide a combination of personal and business reference letters. It is through these letters that the board will attempt to get to know you. Have your friends and associates write positive things about you-but also include some basics: How long have they known you? How did you meet? Why do they think you will make a great addition to the community? If they live in a co-op or have served on the board at their building, it is a good thing to mention. Letters should be addressed to the Board of Directors, on letterhead and with their contact information.

Tax Returns: Most co-ops require two years' worth of tax returns including all schedules and W-2 forms.

Landlord Reference: This verifies your prompt payment of rental or maintenance charges.

Bank Reference Letter: Just ask a banker at your local branch. They do this all the time and will know what you are talking about.

After you've gathered together all your documents, your agent at Alfred will have them copied and submitted to the managing agent for you. As a rule, if you are applying for a mortgage, managing agents do not accept any papers without a written commitment letter from the bank.