Now you’ve made the arduous decision of buying over renting, and pursuing co-ops over condos, it’s time to delve into the buying process! If you haven’t decided on these choices or want to know more about the options, check out these two Triplemint guides; Buying vs. Renting Guide and Condos vs. Co-ops Guide.
For those of you who are set on buying a co-op in NYC, this guide will tell you everything you need to know!
PC: Jörg Schubert
Now, before you fall in love with the first glamorous co-op you see online, there’s a few steps you need to take before starting your apartment search.
You’ll need to manage your savings and finances. Down payments for co-ops can reach up to 30 percent, as putting less than 20 percent down generally makes you an unattractive choice for sellers. That means you’ll have to put $200,000-$300,000 down if you’re looking to buy a $1,000,000 co-op (though co-ops can be roughly 25 percent less expensive than condos).
You should also know your credit score and begin to address it if needed. Unless you have a substantial amount of savings or inheritance, you’ll need a loan to purchase your first co-op in NYC. Your credit score will determine whether banks will lend to you, so you’ll need to raise your score as high as possible, and keep it there. You can check your credit score once a year for free here!
With a high enough credit score, you should get a mortgage pre-approval from a lender. As a heads up, you’ll most likely be required to submit tax returns, pay stubs, bank statements, etc. Since all sellers require pre-approval, getting it before your search will help you understand how much you can afford, which will help narrow your focus and save you time.
Most steps of the co-op search process are also similar to those of the condo search process. For example, you still should attend as many open houses as you can, and get an attorney and a good brokers agent.
While many real estate firms are broker focused, Triplemint is fully committed to you, the buyer. Triplemint has a unique client experience team, which ensures the smoothest real estate process in New York City.
The difference between condos and co-ops in the search process is that you should look for a broker with experience putting together co-op board packages, and a lawyer familiar with common co-op accounting methods. Co-ops are generally much more thorough and extensive in their application process, and the interview process is a lot more stringent.
Congrats! After hashing out things like price and close date, you’re now beginning the closing process. For co-ops you’ll be required to put down at least 20%, and have to supply a REBNY financial form (similar to a personal balance sheet).
Now, the last thing you need to do before actually closing is complete a board package, securing the final mortgage, and consulting with your agent as to how to successfully navigate a board interview.
Co-ops are notorious for their board approval process, and you’ll need to have your agent put together a significant amount of your personal and financial information in a board package. These generally must be completed within 10 business days from the day the contract was signed for cash deals, or within three business days for mortgages.
Lastly, you’re going to want to prepare for the board interview with your agent– you should make a good impression on the board and be prepared to answer questions about your board package (co-op boards can turn down an applicant without giving a reason).
If you’re accepted, you’ve made it to closing! You will most likely meet with the seller’s party, and once the bank issues the check for the mortgage amount, the seller will hand over the keys. Closings typically take six to eight weeks after an accepted offer.