All Forum Posts by: Garrett M.

Hey Everyone,

I am new to game and looking to purchase my first house this year. My question pertains to the closing costs associated in New York, specifically NYC.

I've been speaking with a few lenders over the past week to find one that is familiar with SONYMA type loans - not sure if this is pertinent to my question but may very well be, given what 'I' see as very high closing costs. I have found an expert in SONYMA's who took some basic information and put together a Good Faith Estimate for me. The breakdown is as follows:

Assuming a $600k purchase price on a 3-family home

Total Loan Amount $540,000

Origination Charges: $845

Appraisal Fee:$550

Credit Report: $22

Flood Certification: $8

Up-Front Mortgage Insurance: $8,856

Tax Service Fee: $75

Inspection Pre-Closing: $155

Title Services and Lenders Title Insurance: $3965

Owners Title Insurance: $910

Government Recording Charges: $1034

Transfer Tax: $21,345 (WOW!!!!!)

Initial Deposit In Escrow Account: $2732

Daily Interest Charges: $1165

Hazard: $1992

Total Estimated Settlement Charges: $43654

Under another section titled ' Estimated Cash Required for Closing'

Subordinate Financing: $15000 (**could someone explain this please?)

Other Credit -Seller Transfer $10950 (**could someone explain this as well please?)

Total Credits: $10950

Total Estimated Funds Needed to Close/Cash Back: $77682

Adding the numbers up, with a $60,000 down payment and $77,000 in closing costs, that is an out of pocket expense of $143,000 to get into this home.

Before going to lenders I must have gone though at least a dozen websites that estimate closing costs in NYC. Based on the home price, down payment amount and bank/attorney fees etc. I was expecting to pay out of pocket anywhere from $14,000 to $22,000 to close. When I saw this $77,000 number I thought it was a mistake! Have I been deluded in the past and this is the true reality?

Edit:

*** The main benefit of this type of loan allows me to get in to a 3-family with less than the conventional 25% downpayment at only a 10% downpayment at $60K, and pay upfront MI rather than until adequate equity is in place. My assumption is the high closing costs are associated with the type of loan and would be lower if I went with conventional. Hoping some experts at BP can let me know if this is the case!

Thank you!!

Thanks for the input guys.

For my first property I unfortunately must be a live in landlord but from #2 and on will be solely investment properties.

Any ideas on how to find property values over time to see if there is an appreciation trend for an area?

I have been looking in a certain area for some time now and about once or twice a month a property pops up that seems much better than those that have been sitting on the market for a while. I now (think) I know what to look for but wanted to run the numbers by you guys first. Here is the best one thus far:

Some background: I currently rent today and am looking to have my first purchase/deal as an owner occupant in a triplex.

List Price $569,000

3 Units: 2 bd, 2bd, 3bd - Market rents average $1,500 and $1,800 respectively. Giving a total monthly income of $4,400

Taxes (annual): $5200

Insurance (annual): $3960

PI: 2443 + Taxes :433 + Insurance $330 (conventional)

Keep in mind that I would be living in one of the 2 bd units but I want to run these numbers as if I didnt live there.

Using the 50% rule I get the following

Conventional: $4400 - 2443 = 1957 -2200 = (243) month cash outflow

I am not sure if I should be including the taxes and insurance in this equation. This is my biggest question here on if the taxes and insurance should be calculated into the equation. Regardless of if I purchased my own place as a single family or as a duplex I would be paying for these expenses. My gut tells me that I should include them in the equation but if I do then I feel like I am never going to find a property that works well in my area - hence the 'feeling defeated'

Continuing on assuming I am not including those numbers:

Should I choose to live in one of the 2 bedrooms, I am effectively paying $1500 + 243 = $1743 to live there. This price is actually only $43 more per month than I paying now so I look at this as - (at a high level) for only $43 more per month, I can own my own home and build equity.

Thanks in advance for any guidance here.

Speaking with a lender today they mentioned I could use SONYMA rather than FHA to avoid a 20/25% down payment on a triplex. Has anyone here had any experience with this product?

Has anyone used this program in New York / NYC recently?

I just got off the phone with a loan officer who was advising this product would allow me to get into a 3-family with less than 20% down. I could pay off PMI upfront rather than until equity is 20%.

It sounds too good to be true so I am questioning. Thanks

Count me in!

Just looking to clarify a few points so I can better understand the direction I want to move in REI.

As of today I have enough for a 20% down payment in my area. Triplex, owner occupied.

I am looking to move into my first deal for at least 2 years while renting out the other two units. After this time, I would move out and do this again with another property.

I see three scenarios here:

1 - Putting 20 down would allow me to get in to my first deal but would require a longer time to save for a down payment for a second deal assuming I go conventional. I believe (and please correct me if I am wrong) I could go conventional for my first and FHA for my second at 3.5% down payment with lifetime PMI or conventional at 5% down payment with temporary PMI.

2 - Putting 5% / 10% down with conventional, paying PMI until my equity is 20% and then getting rid of the PMI. Would I have to refinance for this or just re-appriase?

2 - Going FHA with 3.5% down and essentially repeating scenario 2 but having a permanent cash outflow for PMI. I see may folks on this site praising FHA but I do not understand the benefit. If I could put 5% down and avoid lifetime PMI plus all the other upfront FHA costs I would do it in a heartbeat over FHA. If I only had 3.5% I would save up until I could make the minimum for conventional. Unless there is something I am missing, why ever go FHA?

Looking for any insight that can be offered here on if I am asking the rights questions or missing out on a point entirely.

@Wayne Brooks - That is a great question to ask!

I am thinking of revisiting my initial strategy via FHA rather than conventional. If I find a bank that will work with me, putting 20% down would avoid PMI but drain my cash. Going FHA would be less cash down but leave a lot in reserve for cap x, repairs on house #1 and even more important for my next purchase.

Thanks everyone

Hi Everyone,

This is the first I am hearing about this on a residential multifamily building - maybe I have not done enough research on the topic but I was hoping to get some insight from the more experienced folks here. I have been saving for a down payment of 20% in order to buy a 3 or 4 family building as owner occupied. Just this past week I finally amassed the amount that is typical for a 20% DP in my area and figured I would call a bank to get pre-qualified given my financials. After running the numbers, the bank advised that I would need 25% for a 3 or 4 family but only 20% for a one or 2 family under conventional financing. Under FHA I can be approved for significantly higher but I do not ever want to pay PMI now that it is locked on for the life of the loan. (and with the recent news from the FOMC, rates may begin to creep up!)

I am going to call other banks as this was only the first one I reached out to but was wondering if this was the norm or if it was somehow based on my financials.

On the other hand, my strategy is to buy my first property, live in it while renting the other units out and do that again within ~5 years and repeat again. Should I choose to go the FHA route, I would have more funds available for my 'second' down payment on the next house. Anyone have any opinions on this strategy and if it is flawed?

PS, I am looking in NYC if it matters.

Appreciate any responses !

Many Thanks

Thanks Dawn!! Ill read it over.