Hello all. I'm new here and hope to get some replies. I'm thinking of buying a co-op in NY city. I make about 1000 a week and pay 1000 a mo. In rent, my share, Anyway, what would the cost savings be if any should I buy this apt. The mortgage would be about 1600 a mo. Plus 1000 for fees and taxes (2600). I am in the 33% tax bracket.
Please help, thank you.

So right now Living Expenses are 1,000/month.

Under this new plan it will be 2,600/month.

Can you afford an extra 1,600/month, an extra 19,200 a year?

Benefits? Eventually your mortgage will be paid off and you will own your own home. My guess is that this place is a bit out of your price range. Or perhaps you could get a longer mortgage length and pay less in your monthly payments.

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Originally Posted by CaptainForest

so right now Living Expenses are 1,000/month.

Under this new plan it will be 2,600/month.

Can you afford an extra 1,600/month, an extra 19,200 a year?

Benefits? Eventually your mortgage will be paid off and you will own your own home. My guess is that this place is a bit out of your price range. Or perhaps you could get a longer mortgage length and pay less in your monthly payments.

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I agree with all that Captain has said, but just to add have to looked at maybe "intrest only" on your mortgage. I'm not aware if these are an option in the States or Canada, but there are a lot of them around in the UK.

But Capital Repayments is safer in the long term, just go for a longer term to bring your over all cost down pcm ! If you go for interest only you only pay back interest which means you need some kind of repayment plan at the end term, to settle all the capital left too pay the lender.

I'm also aware that NY has a very dear price TAG on property.

Thanks for the replies. I was thinking in terms of tax benefits offsetting the extra mo. Payment. The interest claimed at years end would be?

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Originally Posted by flyer

Thanks for the replies. I was thinking in terms of tax benefits offsetting the extra mo. payment. The interest claimed at years end would be?

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All of Mortgage interest & property tax are deductible when you file itemized. If you are 30% tax bracket and pay $1000 in interest, you will get $300 in tax break.

Based on the limited information that you have provided, I have made some educated assumptions: $1000/wk income = $4333/mo; a $1600/mo P&I will carry a $260,000 mortgage at 6.25% for 30 years; that represents $16,250/yr interest: say property taxes are $6000/yr; total deductions are $22,250/yr less $5,000 Standard Deduction (single)= $17,500/yr extra deduction x 33%= $5692/yr tax savings/yr= $474/mo tax savings. Keep in mind that with the extra deductions you might lower your tax bracket, thereby reducing the tax savings. By making this purchase you would be increasing your gross housing ratio from 23% to 60%. Depending on your Loan To Value Ratio, credit, and other debts, you might not qualify for a mortgage. Unless you anticipate substantial property appreciation, I feel that you might be getting in over your head. If you have a room mate to share the added housing expense, it might mittigate the risk. Otherwise it would make sense to keep renting.

Thank you for that very well, thought out answer. It's what I knew was right but had to see. Much appreciated.