My 5-unit Brooklyn co-op (building is very similar to a brownstone but slightly larger) took out a mortgage of $700,000 a few years back. Apparently (and this is part of my question) we are only able to get a kind of balloon loan which keeps us in a perpetual cycle of re-financing.
Our loan payment is calculated based on the amortization of a 30-year fixed rate loan. However, after ten years, the entire principal comes due. This means that for ten years we are mostly paying interest and not making a big enough dent in the principal. When this loan matures, we either have to come up with more than half a million in cash OR refinance, starting over with another "30-year" loan that comes due in 10 or 12 years.
The prospects for actually getting the loan paid off (without massive assessments) are bleak.
Does anyone know of a better way? Are there actual 30-year mortgages available for NYC co-ops?
one other note: our lender is using an amortization formula that is different from what all mortgage calculators use for a 30-year fixed rate loan. I don't understand what they are doing except that it creates the same monthly payment, but the payment is weighted even more toward interest than a standard 30-year amortization. Hence EVEN LESS principal paid down after 10 years.
Thoughts/advice/other stories welcome.