On behalf of Julian White of Greenberg & Wilner posted in residential real estate on Wednesday, February 24, 2016.
Whether it is your first time or you are a seasoned homeowner, finding the right condominium or co-op never fails to be an exciting adventure. However, if you live in Manhattan, the median price of a condo or co-op is around $1 million, so part of the challenge in finding a home is financial in nature.
What you can do to prepare yourself
A recent article in the New York Times recommended steps that buyers should take to prepare themselves when buying a condo or co-op in the city. Some of the tips offered included:
Be prepared to pay. Put simply, buying a home requires a significant amount of liquidity. Buyers should be prepared to put down at least 20 percent of the purchase price in order for you to be approved for financing. In addition to the down payment and closing costs, there are several other taxes and charges that you will be responsible for, including the mansion tax (for properties sold for $1 million or more), appraisal fees, co-op lien search fees and condo board package fees.
Obtain preapproval. If you are financing your home purchase, it is important to obtain preapproval from your lender. During this process, the lender will look at your credit and financial information and provide you with a written statement of how much you will likely be able to borrow. With plenty of cash offers out there for condos or co-ops, being preapproved is vital to getting your offer taken seriously, as it assures the seller that you can obtain the financing necessary to back up your offer.
Bulk up your credit. Speaking of financing, you will need a strong credit score in order to obtain it. Before you begin searching for a home, order a copy of your credit report from the three major reporting bureaus, so you can know your credit score ahead of time. Doing so will give you time to correct any mistakes on your report that are unduly lowering your score. Doing this early well before you start looking for homes will also give you plenty of time to pay down credit card debt, which can lower your score if you are carrying high balances.
Be ready for scrutiny. Whether you are buying a condo or co-op, you will be asked to submit personal financial information, such as net worth, annual income and assets owned. For a co-op, the board will scrutinize your financial and personal information much more closely. If the board is not satisfied with the information provided, it can turn down the sale, unless it is discriminating illegally by doing so. Some co-ops do not allow purchases that are financed and others may require you to prove you have sufficient finances to cover a year's worth of mortgage and maintenance fees.
Help is available
Although buying a condo or co-op in New York can be intimidating, you do not have to go at it alone. With over 50 years of experience, the attorneys at Greenberg & Wilner are well suited to guide you throughout the entire purchase process, giving you the best chance of securing the home that you desire.