Ask The Experts | All About Mortgage Rates

We received a fantastic question from a buyer a few weeks ago.  He asked,  “What do current mortgage rates look like and who do you suggest I talk to?”  For this, we will let our expert advisor Matt Jablonski, Loan Officer from Citizen’s Bank, take the stage and answer some questions that are fitting from an on the ground perspective.  Matt, the mic is yours:

1. Where are we, with mortgage rates in relation to a year or two ago?  What do you think is going to happen in the next 12-24 months?

Mortgage rates are still historically low. The biggest shift is probably in the “jumbo” mortgage market. It wasn’t that long ago that a homebuyer would have to pay a higher interest rate to borrow more than the conforming loan size limits put in place by Fannie Mae and Freddie Mac. Now, in many instances, homebuyers have access to low interest rates when they borrow more than the traditional conforming loan size limit of $417,000.

2. What is the most conservative product you have?  What is the most aggressive product you have? Which are buyers mostly opting for and why?

The most conservative product will likely always be a fixed-rate mortgage. A conventional 30-year fixed-rate mortgage is still the most commonly used mortgage product in U.S.  A client’s principal and interest payments would never change no matter how long they’re in a fixed rate mortgage.  If a client is willing to take on some risk (the risk that their interest rate might change in the future), they could choose an adjustable rate mortgage (ARM). In exchange, that client would typically see a reduced interest rate. Citizens Bank does offer 3/1, 5/1 7/1 and 10/1 ARMS products, but we also offer a 5/1 and 7/1 interest-only ARM, which is definitely a popular product in the New York City’s jumbo mortgage market. Another factor to consider is how long you expect to stay in the home – if you aren’t planning on being there for more than 5-7 years, than an ARM might be the right product for your needs.

3. Many banks require a banking relationship with the borrower to give them favorable rates, does Citizens Bank require that?

We do not require a banking relationship but you can save a 1/8 off your interest rate by opening a Citizens checking account with your monthly payment automatically debited from that account.

4. The Margolis Team loves working with you because you are so thorough and professional;  do you have any anecdotes to illustrate how we got a very complicated deal done together?  One that probably wouldn’t have gone through without a collaborative partnership?

Every purchase transaction is its own unique journey. My relationship with the Margolis Team works because everyone involved proactively goes out of their way to identify any potential pitfalls before we’re even in contract. The ability to do that comes with experience. For example, the realtors on the Margolis Team understand the difference between a warrantable condo and a non-warrantable condo and all of the factors that might make it difficult for a lender to offer financing in certain buildings (i.e. low owner occupancy levels, too much commercial space, or a budget that is not allocating enough toward reserves). Identifying those pitfalls and asking all of the right questions early-on in the process allows me and the Citizens Bank condo approval team to make a determination on a building very early-on in the process.

5. Are there any foreseeable changes coming down the pike that would impact buyers? Any tips for buyers?

Guidelines in this industry are constantly changing. But, no matter how much they change, the basics will always be true to some degree when we’re talking about a person’s ability to borrow money to purchase a property.  During the pre-qualification process, I try to simplify things for my clients and explain that there are really four components to every mortgage application:

1. The property itself. A lender wants to make sure a property is worth what the client is paying for it (by way of an appraisal). And, if it’s a condo or coop, a lender will make sure the building is financially stable and properly insured.

2. Lenders will look at a borrower’s credit profile to see if there is any derogatory information in that borrower’s recent history that would prevent them from moving forward with a mortgage.

3. A lender will verify that a borrower has enough liquid assets to cover their down payment and closing costs.

4. A lender will make sure that a borrower can afford to make their mortgage payment. They’ll do this by comparing their gross monthly income to their already-established monthly obligations as well as the projected total housing payment for the property they wish to purchase.

The best advice I can give is to keep it simple using those four components along with a good team to guide you through the home-buying process. There is more government regulation today than there was just a few years ago. This doesn’t necessarily mean it’s more difficult to obtain a mortgage for someone that is qualified, but does mean a lender is required to collect more documentation during the loan process to prove that a borrower is truly qualified to borrow the amount they are seeking. If a homebuyer goes into the mortgage process understanding and expecting the lender to ask for more information compared to the last time they may have applied, it might lead to a more pleasant experience with less anxiety.

Matthew Jablonski
Cell: 914.714.9102
NMLS: 146822
Loan Officer | Citizens Bank N.A.
Home Lending Solutions – Mortgage

Westchester Office:
707 Westchester Avenue, Suite 104
White Plains, NY 10604

Manhattan Office:
125 Park Avenue, 18th Floor
New York, NY 10017

At The Core | Political Uncertainty and Real Estate

What do crashing stock markets and exploding office gossip have in common? They both feed off of and are fueled by uncertainty.  Indeed, today’s political and economic landscapes are both littered with uncertainty stemming from our upcoming presidential election, suspense only exacerbated by the highly polarizing nature of this one.  And what do we know in the absence of the known?  It makes people not want to take any amount of risk.  As uncertainty increases, so does one’s loss aversion.

In terms of real estate, political uncertainty means everyone is holding their breath. The election has become that looming, enormous, ever-present elephant in the room that dampens all activity.  People to the left and right all can’t wait for this election to be over, already, so that they can move on with their lives.  Buyers and sellers, alike, are questioning what will happen to real estate prices after the election and our answer is: “not all that much.”  We believe, especially as it pertains to NYC real estate, though in many ways applying to other vibrant urban centers, three factors are responsible for our answer:

  • First, real estate is local. Despite national indices and headlines, real estate always has and will be local, local, local. It has its own local market, its own local supply and demand dynamic, and its own local, living ecosystem.   This is why implications of the Case-Shiller only have a fractional impact on the reality of NYC real estate. In many ways, particularly in a country as large as ours, one could argue there is no such thing as a national real estate market.
  • Second, real estate is a hard asset. Unlike other “soft” assets that can more easily swayed by regulatory and political trends, real estate generally dances to the beat of its own drum.  It’s rather difficult to pass legislation affecting real estate nation-wide, thereby limiting the potential impact that any one election cycle would have on prices.
  • Lastly, NYC is one of the world’s premier real estate capitals. It is solidly planted on the international stage, buttressed by a diverse array of buyers from across the globe, and therefore buffered from the more dramatic oscillations that other markets may feel based on any one catalyst.

With all this said, there is one thing that uncertainty definitely brings for the savvy decision-maker: opportunity.  When uncertainty diminishes, things go back to normal and the relative paralysis experienced before hand dissolves.  Meaning: if you see an opportunity now, take it! The opportunity to list, the opportunity to purchase, no matter – there is much to gain when you act (armed with information and intelligent research, of course) while others are paralyzed by fear or indecision.  Pockets of arbitrage still exist and they will always be there for those more seasoned among us who recognize and are willing to pounce on them at the right time. Tic toc …

Monthly Gem | 45 E. 22nd Street

This month’s hand-picked gem is 45 E. 22nd Street. At a soaring 777 feet into the air, the Kohn Pederson Fox-designed building stands head and shoulders above the Flatiron District’s competition as its tallest tower. As per Curbed, “it’s also one of the most unusual, with a narrow, cantilevered base that rises to a wider, slightly to-heavy pinnacle.” Among the 83 condos offered in the building, the priciest is a 6,032-square-foot duplex penthouse for $38 million, from which all can be seen at almost all angles: the Empire State Building, the Met Life tower, and the Lower Manhattan skyline, to name a few.

A few notable excerpts from its website:

  • “… homes that deliver a life in the clouds, above a park, in the center of New York City. Kohn Pedersen Fox designed from the inside out; the angular building silhouette optimizes the views and light that bathe each residence. The tower soars to accommodate ceilings over ten feet in the residences while floor-to-ceiling glass walls capture 360-degree views of the Manhattan skyline.”
  • “The fluted silhouette rises above a manor house-inspired base with five levels of leisure, social and fitness amenities crowned by The Upper Club, and the private dining room and kitchen, perched fifty-four stories in the sky. The Upper Club gives every resident a Penthouse-worthy experience. This will be one of the most elegant and coveted residential amenities in New York City. The entertainment suite with catering and demonstration kitchens can be reserved. Floor-to-ceiling windows capture north, west and south facing views.”
  • “The Flatiron District at Madison Square Park is the centerpiece of New York’s most quintessentially stylish neighborhood, at the intersection of Gramercy Park, Chelsea, and NoMad. The park is an outdoor sanctuary, emblematic of the creativity that resides in this Manhattan neighborhood, home to Michelin-starred dining, heralded shopping, and avant-garde art. It is a desired destination for connoisseurs of design and taste.”

Apple Bites | Fowler and Wells

FiDi’s Beekman Hotel has been on our radar screen as home to Tom Collichio’s highly anticipated restaurant. Well, that restaurant finally has a name: Fowler and Wells. Iconic American food but with French technique, that’s going to be its offering. Who doesn’t love that? According to Colicchio, “For me, I always felt that the space should go hand-in-hand with the food. For some reason, when I look at what we’ve done design-wise, that’s what it feels and wants. It doesn’t want anything super modern.” The restaurant will seat 90 while the lounge, a more casual space in the atrium will seat about 70. As per the NYT, “Mr. Colicchio named his restaurant for two phrenologists who practiced their pseudoscience in the building. With his executive chef, Bryan Hunt, he has devised a seasonal menu with dishes like chicory salad with pears, candied walnuts and Roquefort cheese; sautéed foie gras with persimmons, pink peppercorns and bitter greens; and rabbit schnitzel with pistachios and lemon. Favorites from an earlier era, like lobster thermidor and beef Wellington, will be offered as specials. “I think of this as old New York modernized,” Mr. Colicchio said.”

Needless to say, we can’t wait to partake in this culinary experience!


Date Your City | Fall at The New York Botanical Garden

The fall is a wonderful time of year for our city. Leaves-are-a-rustlin’, kids-are-trick-n-treating, and the New York Botanical Garden exhibits are truly exquisite.  Until October 30, you can check out:

  • Scarecrows: From the Heartland to Horror: “Throughout history, scarecrows have been the guardians of gardens. Sculptor and artist Ray Villafane returns to NYBG to create an original installation that explores the evolution of the scarecrow in the U.S., from its everyday role in agriculture to its status as a cultural icon in films and comic books. This art display features vignettes crafted from natural materials and set amidst swamp and marsh in the Garden’s landscape. Explore the detailed display during the day, discover its surprises as it comes to life after 3 p.m. and on Scarecrow Nights.”
  • Giant Pumpkin Weekend: “Monstrous pumpkins from around the country—some weighing in at more than a ton—once again arrive at the Garden, arranged in collaboration with the Great Pumpkin Commonwealth. Meet the growers to learn more about the growing process during Q&A sessions and enjoy photo ops with these giant gourds.”