Looking for a Roosevelt Island Condo-Read This First

Those looking to buy a condo on Roosevelt Island, or anywhere else in the New York metropolitan area, read this article about the new market guidelines for obtaining a mortgage from the NY Times 9/23/07 real estate section. According to the article:

A MONTH after the mortgage markets started to crumble, mortgage brokers and lawyers say that New Yorkers are finding it harder than ever to get mortgages and are increasingly backing out of deals. This lending slowdown has seemed to affect a broader segment of New York City apartment hunters, many of whom are now waiting to see if prices drop because of the mortgage crisis before they commit to buying.

And:

...The market has reached the point that mortgage brokers like Lori Famighetti, chief executive of Oxford Wellington Mortgage Company, are telling their clients in New York not even to try to get a mortgage for more than $1 million at a competitive interest rate if they have a credit score of less than 680 and want a loan of 90 percent or more of the purchase price.

“This is the market now,” Ms. Famighetti said. “The buyer has to have a 700 or 720 credit score” to be considered for a mortgage that would cover more than 90 percent of the sales price.

Also, for those buying into a new development:

Brokers warn that some of the most adversely affected buyers will be those seeking to borrow a lot of money for new condominiums that cost $1 million to $2 million, without having been able to lock in rates on loans.

Jeffrey Appel, director of new development financing at the Preferred Empire Mortgage Company, says he has seen buyers who have already made down payments on apartments this expensive, who are now having trouble setting mortgage rates. As he explained it, these buyers originally thought that they could borrow nearly the entire amount of the purchase, but now many banks won’t lend them as much, and they will have to come up with the difference.

“I’m concerned about the folks who have been approved at the 90 or 95 percent level where the products or programs may change before they close,” Mr. Appel said.
Many people hoping to buy new apartments are finding that, months before their closing dates, they cannot lock in rates. Buyers who do not qualify for the mortgages they need by the time they close also risk losing their down payments, because contracts for them tend to be ironclad.

Finally,

Other buyers have backed out of deals because they can’t afford their higher mortgage payments and they think prices may drop later this year.

Here's Curbed view.
More "End of the Boom" from Gotham Gazette.