Wednesday, January 13, 2016

The Road to a Successful Closing - No Detours!

Purchasing property in Manhattan can seem like a maze at times, but our helpful info-graphic above and our three critical "next steps" below will illuminate the proper path to a successful closing! Preparing financially is the most important aspect to purchasing an apartment and it is commonly left to the last moment by the majority of buyers. Below is designed to initially explain the three key components of every co-op purchase and what everyone will need to proceed:

Ø  Financial Statement – Full disclosure of your finances is required with every offer. Please note: When working as a buyer’s broker, I have a fiduciary responsibility to my customers through reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, and duty to account. An accurate assessment of the following is required:

Liquid Assets (cash, money market and brokerage accounts)
Retirement Assets (or any other long term assets)
Income (salary, bonus, interest, dividends and any of miscellaneous income)
Liabilities (any debts)

Generally, co-op's will require supporting documentation once we have a fully executed contract of sale. Below are important ratios used by co-ops as a standard to qualify buyers. 

Debt to income ratio (typically needs to 28% or less) this is all of your monthly debt plus the new mortgage and maintenance/taxes divided by your total gross monthly income including any bonuses. 

Cash reserves – Most co-ops require 2 years of mortgage maintenance and taxes to be in “liquid” reserves after closing.  They do not consider IRAs, 401Ks Keoghs, TIA CREFFs, or Real Estate assets to be liquid, unless you are over the age of 65.

Ø  Pre-Approval Letter – It is important to know your borrowing potential, especially now with lender’s tightening credit standards. A mortgage banker will qualify you and indicate what documents are required and ask to pull your credit. This will offer you piece of mind, determine your purchasing power, define the current mortgage rates and help us determine your monthly expenses. This letter is also required with every offer.

Ø  Attorney Once we have an accepted offer, they will offer important advice throughout the process and conduct due-diligence. This is a must expense for even the most savvy investors and it is highly recommended to use a Manhattan based real estate attorney who knows the business. They will look over the co-op’s minutes, budget, tax statements/returns, contract, and prospectus/offering plan. They will review all of the closing papers, walk you through the closing and will also advise you of potential risks.

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