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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