If you’re thinking about buying an apartment in Manhattan, this may be a great time to grab the gold ring.  Prices are much lower than the last few years – brokers are looking back to 2004-2005 for comparative prices (comps).  And mortgage rates are amazing – fixed-rate mortgages have been hovering in the 5% to 6% range, the lowest in the past 20 years except for a stray month here or there.  The experts don’t expect them to go lower and aren’t ready to predict when they’ll start going up again.

If you look at listings online, asking prices might still seem high. Sellers hate to let go of the peak value their apartments reached on paper in 2006 and 2007.  Be sure your buyers’ broker knows pre-bubble values and is an all-out negotiator for you.  Along with purchase price, negotiations can also include terms, asking the seller to pay some of the points, for example, or maintenance rebates or contributions to other closing costs . Think about finding a dedicated buyer’s broker.  He or she will negotiate harder for you and shouldn’t cost a dime, as broker’s fees should be built into the seller’s cost.

Start the process by making sure you can qualify to buy a coop or condo apartment:

• Can you come up with at least 20% of the purchase price for a down payment?
• Will your total housing costs (Mortgage + Maintenance–for a co-op — or Common Chargers + Taxes–for a condo) be at or under about 28 % of your income?  This ratio can be somewhat higher for a condo purchase.
• Do you have an excellent credit score?  The best rates in NYC currently require a credit score of 760 or more. If you’re not there, note that a good mortgage broker can find fairly competitive rates with FICO scores of at least 720. If your score is below that, it’s a great idea to raise your score as much as you can before you start to shop.
• Will you have the cash for closing costs and, what many co-op boards and/or lenders require, post closing cash reserves up to one or two years to cover mortgage, taxes, maintenance etc?

Why now?  The best answer can be found by asking recent buyers.  One new owner bought her one-bedroom co-op (with patio) in Soho in March. She had stopped looking late last fall because the prices were just out of reach.  But by early ’09 she could buy a lot more apartment than she’d expected, in a lot more locations. She ended up paying $490,000 a 15% reduction from the $569,000 asking price.  As the Time Out New York article points out in this case as well as two other examples, there are closing costs, some perhaps unexpected, beyond the simple purchase of the apartment.

If you’re ready to make the move,  plan to live in your new place for at least three to five years and  have a comfortable cushion of post closing reserves, then it can make good financial sense to buy now.  Take a look around.  You may be pleasantly surprised at what you can afford.