Riverdale Co-op Financial Requirements? (Yonkers, Vernon: sale, rent, insurance)

[mathjak107]

Originally Posted by esme17

Wow. This is such an education... I knew none of this stuff. Very good to keep in mind no matter when/where we end up buying. I guess I never even considered that a coop or condo might have an underlying mortgage... but of course it makes sense. Do some coops or condos exist (older ones, I guess) that have actually paid off their mortgage? Or is that non-existent? Thanks again for the info!

thats the whole idea of these forums... to learn stuff we all didnt know....
we all know bits and pieces of things since we are not proffessionals in most of the discussions.... but if you put enough bits and pieces together you usually get a good idea of things

[Viralmd]

My building, which is an old co-op, has just taken out its second mortgage, the first one being paid off. We get a huge tax benefit from this. But even before the new mortgage was put into place we never required 100% cash.

[mathjak107]

the huge tax benefit is really no benefit to speak... you have 3 bucks of your maintaince money going for interest and they give you back 1 of them.... if you had no mortgage on the building you would either pay less or have a bigger reserve fund hypothetically..

its funny how we look at certain expenses and we all think its a good thing to spend 3 bucks to get back a buck ..... its all expenses folks
... its always better not to have the expense then get the deduction for part of the expense

[bluedog2]

I disagree with you here,mathjak.Either that 1 buck(and as you know it is a lot more than that) goes to pay the mortgage on your building or it goes to the IRS. Since paying mortgages either builds equity or goes to improve(increase the value) of your asset or both, I would rather divert as many otherwise lost tax dollars into my investment.
What would you do if I pointed a gun at you and said either give me your money or put a new roof on your house ?

[mathjak107]

no , the interest part of a mortgage dosnt build equity, dont forget you can have an interest only mortgage. no matter how you slice it any dollar that dosnt add to your piggy bank directly is an expense... be it taxes or interest..... all you have to do is ask yourself one question...is my piggy bank richer or poorer after i pay this bill.... the principal part of a mortgage is seperate from the interest part..the principal part is not deductable so you actually are paying 4 dollars... a dollar goes to equity , 3 dollars go to interest.. your tax deduction is a buck... out of 4 bucks paid you got 2 in your piggy between equity gained and tax rebate


everyone gets the standard deduction as well whether you have a mortgage or not.. so if you dont have enough to itemize you might not see any tax deduction for mortgage interest at all.... the further you get into a mortgage the less interest you pay... for some they reach a point they dont have enough to itemize

[bluedog2]

Originally Posted by mathjak107

no , the interest part of a mortgage dosnt build equity, dont forget you can have an interest only mortgage. no matter how you slice it any dollar that dosnt add to directly is an expense... be it taxes or interest..... all you have to do is ask yourself one question...is my piggy bank richer or poorer after i pay this bill

Poorer only if you are lucky enough ( LOL ) to live in a cardboard box in the park and have no living expenses at all.You have to pay something to keep a roof over your head.Do you want to pay whatever it is to yourself or to a landlord ?

[mathjak107]

no easy answere possibly to the landlord...... i had posted this in another discussion but its always good to re-read it.


although we call a home an appreciating asset its part of a much larger picture called your overall housing costs... because you live in it these costs are all paid by you and accumulate over a lifetime unlike rental property or investment property which you pay off the income . . the rise of the house in value over time merely offets the giant lifetime expenses of all the costs a homeowner has for the priveledge of owning that home..... your taxes, mortgage interest, repairs,renovation,maintaince,landscaping,insuranc e ,the gardner,the snow plow guy, the list goes on and on.

a lifetime in housing costs are really measured in who lost the least the buyer or the renter, not who made the most as those expenses whether you rent or buy usually eclipse the value of home appreciation over a lifetime. it never stops accumulating even if you sell a home and buy another... like rent just keep adding it all up over a lifetime.

soooooooo if your buying a house think of it as a consumption item, not an investment, think of it as a collector does of fine art, or your jewelry. its something you use and consume and costs you money. the fact a home rises may or may not mitigate the expenses to put you ahead of renting

buy a home for all the things a home can give you (good or bad)

the joy of owning something
doing as you please
the security of owning a payed off home
relatively fixed costs compared to renting

the fun of renovating and changing

etc

while technically a renter appears to be at a dis-advantage because hes not buying anything with his rent that may not be true in alot of areas or situations . here in the greater new york area the cost between renting and buying initially is 1/3 to 1/2 less a month and no massive down payment... it takes about a decade for the rent to equal the costs of buying at the 2 to 3% a year rent increases. each year though the renters advantage grows smaller and smaller as the rent goes up . all though just real estate taxes in alot of areas see bigger jumps the costs are offset with tax deductions on some expenses so its all about what the renter did with the money saved each month and down payment money that determines most of how a renter does.

you cant compare renting vs buying unless you have the renter putting equal amounts of money as well into an appreciating asset. thats where most comparisons fool us, they rarely do this. historically equities have outpaced home appreciation by 2x with alot less expenses in the early years of renting.

i can tell you because home real estate appreciates long term just above the rate of inflation in most markets a person who invests the money he planned to buy with and the money he saves each month compared with buying in nothing more than a mix of diversified index funds stands a great chance of coming out further ahead ...

infact i can say with my own expierience that if you were going to pay cash for the house like i did when i bought my house back in 1987 in queens ny and instead put that money in that same mix of funds (i did that also) i can tell you that today you can subtract out all the rent you would have paid for all those years and still have enough left to buy over 2 houses .....

you have to take a step back and stop looking at just one aspect of your overall cost of housing which is where everyone fixates THE HOUSE
and look at the total costs over a lifetime to know if you spent less renting or buying..... chances are they both cost you and took money out of the ole piggy bank and not made you richer .... housing costs are like food costs, they are expenses not gains

for a eye opening idea of expenses look at only 2 of the many components of expenses a homeowner has , taxes and mortgage interest,,, those two alone usually need the house to appreciate at least 3x and probley more in 30 years just to clear the after tax deduction amount you paid in...

most people pull out one piece of the puzzlel the house cost and what its worth without looking at the big picture namely a lifetime of housing costs and merely look at one aspect without the other parts... since we dont know how much future appreciation will be, we dont know rent increases, we dont know your future expenses or how many times you will sell a house and buy another and incurr more costs there is no answer.. in fact the biggest part on the renters behalf who chose to invest else where and rent is we dont know future market returns..... your trying to predict an outcome thats impossible... we dont know who will spend more in housing costs when all is taken into consideration.

picture it as if you were an investor.. you made big bucks on one investment (the house) but all your other investments tanked.... overall your down , the big gains of the one investment merely mitigated the overall loses


the jury is still out as far as whether the age old debate, is it better to buy or rent financially ?... there is no answer and probley never will be

[mathjak107]

Originally Posted by bluedog2

Poorer only if you are lucky enough ( LOL ) to live in a cardboard box in the park and have no living expenses at all.You have to pay something to keep a roof over your head.Do you want to pay whatever it is to yourself or to a landlord ?

typically a house costs you 2 to 3x what you paid for it once the interest is factored in, so the question is if you paid cash would you be a head without getting back only about of 1/3 of all that interest you paid and had your tax deduction... the answer is no.... however depending what you did with your own money vs taking that mortgage may indeed come out in favor of the mortgage.. but its not based on any tax deduction its determined by the return you got on your own money by holding on to it and taking a mortgage instead... the tax deduction alone is a minus not a plus for your piggy bank

[7 Wishes]

Originally Posted by bluedog2

esme,I don't think you should interpret this discussion as an indication that buying a place is impossible.It is definitely not as easy as it was 2 or 3 years ago but it is not impossible either.

I am a city teacher( middle class enough ?).A teacher /friend at my school just closed on an apartment(Coop) in The Bronx 2 weeks ago and another is very actively looking and will likely buy in a couple of weeks or so. The one who bought makes about $65,000 /yr and got a 90% FHA coop loan.
If you look on Property Shark or any other site that tracks real estate sales, you will see that every week hundreds of people are closing on coops in the middle class neighborhoods of the city despite what is going on with the economy.

Each building,bank and purchaser's situation is different and there are obviously a lot of variables but it is not at all impossible and pretty much the same hurdles are there whether you want to buy a coop or a condo or a house.Lots of middle class people are still managing to do it every day though.

For the most part (at least from my experience) coops in the outer boros (except, but not always, parts of Riverdale) and Westchester (especially Yonkers and Mt. Vernon) are very different in this regard from those in ritzy parts of Manhattan (i.e. the ones celebrities even get rejected from).

Here (I speak from southern Westchester experience) coops are designed to be the "affordable" housing ownership alternative for decent working middle class people (both blue and white collar) who have adequate financing and good credit. I know LOTS of teachers, nurses, police/fire/EMT personnel, etc. who live in coops around here, though I admit some of them got in via the "sponsored apartment" route I mention in an earlier post.

[bluedog2]

All I can say is I have done both and I'll take ownership.

In my current situation,I am paying $1,200/mo in mortgage(coop loan) and maintenance fees combined and almost all of the loan payment and 25% of the maintenance is tax deductible.There is a rent stabilized tenant(of the sponsor) still in an apartment in the same line as mine paying 1,200/mo in rent (to the sponsor).I bought the apt totally renovated with a new kitchen and bath.She is still living in the same somewhat run down apt she moved into back in the early 80's.She has been living in the building paying rent to the sponsor for 25 years.She had the opportunity to buy her (or my) apartment for $59,000 when the building converted to coop in 1987.If she had done that her loan would probably be paid off and she would be in her(my) apartment paying only $450/ in maintenance... with a 25% tax deduction.
If she lives long enough,in another 5 or 10 years she will probably be paying substantially more in rent to the landlord than I will be paying in mortgage and maintenance for the same apartment ...with a 1970's kitchen and bath and no tax deductions.

I feel like I am in a better situation.