The Purchase
LAST APRIL, I took the PATH train to the Journal Square stop in Jersey City, where realtor Louis Natelli Jr. was waiting with an assortment of keys. It was my first day looking at condos and my first day in that section of Jersey City. Two hours later, I made an offer and plunked down a $500 good-faith deposit on a 600-square-foot two-bedroom apartment.
Buying a place can be a savvy move, especially with the current economy; real estate is generally not only much safer than stocks, but one of the only investments almost guaranteed to earn consistent returns. There's also the potential for reducing monthly costs, as mortgage interest and property taxes are tax-deductible. Though my Williamsburg rent was cheap, I paid all the utilities and, working from home, my winter heating bills alone often hit $300. After a layoff, my income decreased significantly, and my debt piled up. By last winter, I knew I either had to take a roommate or finally buy something-and quickly. I'd been in Williamsburg for nearly 10 years, and though it was my home, there was no way I could afford to buy there. Houses that were $300,000 when I was looking five years ago now go for twice that or more, with the lion's share not worth a fraction of the price tag.
Real estate agents and writers will often tout a $600,000 house in an "emerging neighborhood"-a popular NYC real estate term-as not only a smart investment, but a steal. For the average person of moderate income, $600,000 is never a steal. These days, my income generally hovers in the 30s, occasionally the low 40s, and I had about $30,000 saved for a down payment. That meant I could afford something around $150, $200,000 if I wanted to stay financially strapped. (Sites like bankrate.com have free calculators that offer very accurate estimates of what a potential buyer can afford.)
And to be frank, "emerging neighborhood" usually means two things: far from Manhattan and unsafe. There are a lot of factors to weigh when considering buying into such an area. Do I want to contribute to a neighborhood's gentrification? Is it safe to walk around at night? Will my neighbors accept me? That said, I had a choice: continue renting in a safe-ish neighborhood packed with amenities, a single subway stop out of Manhattan, or buy, and reduce my costs, but also the conveniences.
I considered Elmhurst and Jackson Heights. Two older friends recently bought a very pretty two-bedroom for $150,000, and their building still had units available. But to me it felt far, and a little too hectic. Jersey City, on the other hand, didn't, and I liked what I'd seen of it in forays to my then-new sidekick's apartment. I wasn't just grappling with the cost of Williamsburg; I'd also had my fill of life in the noisy, arrogant epighetto of cool. J.C. was quieter, and a comparison of the PATH and NYC subway maps revealed it to be much closer than Queens to the West Village and Chelsea, the main neighborhoods to which I need access.
I had made my decision.
MY FIRST STEP IN the buying process was obsessive late-night internet scouring. I used realtor.com, which tends to have more listings than the sites of individual realtors; their listings also have photos, which can be helpful when you're trying to assess what an unfamiliar area's properties look like. I also googled for Jersey City realtors, found an exhaustive list and called about a dozen at random the next day. The first question most realtors ask is if you're preapproved for a mortgage. Preapproval, which can be done over the phone and consists of answering basic questions about income, employment and assets, helps realtors determine if potential buyers are serious. It also gives everyone involved a better sense of what the buyer can afford. Several realtors recommended Keith Sluka of Greenwich Home Mortgages; by the end of the day, his office had faxed me a preapproval certificate and dropped the original in the mail.
Realtors were calling me back, but most of them wanted to show me properties outside of my price range, or ones that sounded bland. I was floored when Louis, whose family owns Prudential A.A. Natelli Realtors, faxed me a list of 50 properties and instructed me to narrow it down to about 10. He then found out if those were still on the market-the phrase "that's in contract" becomes a familiar one, fast-and got us keys.
Having a clear sense of priorities can save you and the realtor a lot of time and disappointment; though it might take months or longer to find a place, if you stick to a reasonable, prioritized set of wants and needs, you greatly improve your chances of staying happy with your new home. I don't need a doorman. I don't need an elevator. I don't need parking (this to the disbelief of many Jerseyites).
Basically, I need a bedroom and an office, a lot of light, privacy and just enough space so that I'm not smacking into walls or the kitchen table. I'd lived in a two-unit house for eight years, and I wanted to stay in a smaller building. I also prefer the top floor-having potential noise pollution downstairs is quite enough-despite the fact that my daily climb home is now 50 stairs, and I'll be the first to know when the roof goes. My place is a full mile from the PATH, which, being car-free, I rely on, but for me a mile is an enjoyable 20-minute walk, year-round. Plus, the bus stops at my corner, and cabs-though unregulated and often sketchy or downright irascible-hover outside the Journal Square PATH station. Having sprawling, green Lincoln Park at the bottom of my street continues to feel more important than a zippy stroll to the train.
Financial considerations are the other kettle of fish. With a condo, one pays a monthly maintenance fee to a management company, plus property taxes, and that's all on top of the mortgage payment. Considering the list price, maintenance fee and taxes as a package deal is crucial-the list price might be great, but if the taxes are exorbitant, that's it for cost-efficiency. It's also a good idea to research the management company; after all, you're at their mercy when something goes wrong. (Mine has a reputation as widespread as it is wretched, and I had good reason to loathe them within weeks. I would have avoided this company like smallpox if I'd had more money to work with, but I didn't.)
Once the seller accepted my offer, we entered into contract. I had three days for my attorney, whom the Natellis recommended, to review the agreement (and, if necessary, haggle), then about two weeks to have the place inspected, and 60 days after that to acquire a mortgage. I liked Keith Sluka, the mortgage guy, immediately. He's witty, warmly professional and has an encyclopedic knowledge of all things mortgage. He also has a great reputation. Though mortgages are available directly from a bank or online, a broker like Sluka shops around for the best deal, and ideally has sound business relationships where you're buying. I found the mortgage process neither hair-whitening nor ulcer-inducing. When I asked Sluka why, he quipped, "You follow instructions." Sluka also requested every imaginable document relating to my financial situation up front: Since he had everything in one file, I never had to launch frantic digs for supplemental documents-often the source of nightmares.
I chose a 30-year fixed-rate mortgage; with rates still low, and with my income, that fit me best. Adjustable-rate mortgages, or ARMs, start out at a certain rate and fluctuate with the market. Those are best suited to people likely to pay off the loan fast, who don't intend to make it to the point when the rate increases-i.e., people with way more cash than me.
Since I found a place well under my $150K limit, I could make a 20 percent down payment and still have enough left over for closing costs (not to mention movers), which generally total about five percent of the purchase price.
There are options for people who don't have much money to put down. According to Sluka, there are two main types: low-down-payment and "low to mod income" loans. With a low-down-payment loan, the buyer puts down three percent; there are no restrictions on income, but there are caps on the loan limit. In Jersey City, the loan amount on a condo or a one-family house can't exceed $214K. With the "low to mod" loan, a Jersey City family of two can't make more than $61K. It doesn't put a cap on loan amount per se, but a family with that income level isn't likely to qualify for a loan higher than $200K. Sluka also cited CRA programs, also with certain restrictions, for first-time homebuyers with low incomes or down payments.
Despite caps and restrictions, there are options. As a single person with a patchwork income of part-time and freelance writing and editing, with a chunk of credit-card debt, I bought a place without a trust fund, sugar daddy or even a mother willing to co-sign (thankfully, that wasn't necessary). It's not big, it's not fancy, the building is creaky-clunky and it's in Jersey. But it's mine.