1) Have I spoken to a mortgage broker? I've said it before and I'll say it again. Talk to an expert! Don't assume anything... Cause when you assume... Well, you know the rest... Get pre-qualified! The worst thing is going to see an apartment that you love and finding at end of the day you can't afford it. A qualified mortgage banker/broker will be able to help you evaluate your finances and credit worthiness. They'll tell you the exact loan amount you can afford and what your monthly payment would be (according to today's rates of course). This way you can feel secure and confident on your house hunt, knowing that you're prepared and not wasting your precious time.
2) Does my building allow guarantors or gifting? Where is your down payment coming from? If you've been saving your own funds for years, you're in the clear. If you are getting a gift for a down payment or if parents are buying for you or they are co-signing and owning the apartment with you, that's when things can get a little hairy. It is so important to know your prospective building's guidelines for these scenarios; some do not allow parents to buy for children at all. Again, get clear with your broker; make sure they know all the details, so they can show you spaces appropriate to your specific needs.
3) What's my attorney going to charge me? When hiring a real estate attorney it's important to discuss the fee upfront. Make sure that your attorney is charging a flat fee instead of an hourly fee. As you can imagine, depending on how the transaction goes, those hours can really pile up. Get two or three names call them all to discuss your particular situation. Hire the one you feel most comfortable with.
4) What are my closing costs going to be? It's important to be aware of your closing costs. They will be different depending on the type of property you buy. For instance, there is no NYS mortgage tax on co-ops since you are not technically really buying property, so closing costs are significantly lower. Also, you need to make sure that you have enough saved for your down payment, closing costs and whatever reserves your mortgage bank & condo/co-op board require. Whether you are buying, a co-op, condo or townhouse, closing costs will be different in each instance. Your mortgage broker can provide a "good faith estimate" of closing costs to give you an idea of where you need to be, again see question #1.
5) What is the co-op/condo approval process? Besides having to be approved for a mortgage. You will also have to pass the board of your prospective condo or co-op. Usually a co-op will have more stringent requirements than a condo. A board application has to be completed and submitted along with financial documentation and letters of reference (personal and business). These are evaluated, along with credit and employment history and sometimes a potential application will be called in for an interview. A co-op/condominium application also has application fees, move in move out fees and possible flip tax fees. Each building is different. Once you negotiate a sale ask to see the co-op or condo board application.
6) Is my purchase subject to mansion tax? On top of all the other miscellaneous fees you'll encounter during the home buying process, another little known expense is New York State's Mansion Tax. If you're buying a property for over $1,000,000 in NYS, you are subject to Mansion Tax, which is 1 percent of the purchase price. Please note, this tax is applicable to one, two, three family dwellings as well as co-ops & condos.
7) How much am I allowed to finance? Besides how much of a mortgage loan you can personally qualify for, each co-op/condo has different requirements when it comes to the amount of financing they allow. Be clear how much cash you have to put down and go see those buildings that fall into your range. Make sure your broker is clear on your max financing restrictions and doesn't waste your time. Again the worst thing is to see an apartment you love and their cash requirements don't meet yours.
8) Does my building allow pets? A lot of condos/co-ops in NYC restrict furry little friends. Personally, I couldn't live without my two Yorkie Terrier's, Gracie & Spirit, so it's the first question I ask. Make sure if you have a pet (or want to get one in the future) that the building allows pets. There are a fair amount of buildings that do not allow pets at all, but, specify type, quantity & weight, it makes a difference. Some buildings will allow only one, some may have a breed or weight limit. If you have more than one pet some buildings might have problems. I have found three and above is definitely a lot more limiting.
9) What are the work rules in my building? If you are buying an apartment that needs renovations, make sure the building doesn't have summer work rules. This means you are only allowed to renovate during summer months. Or sometimes building will only allow a renovation for a certain amount of time (every day after that specified time you will get a per day charge to be paid to the building). Pretty important piece of info, if you've bought yourself a fixer upper that will require months of renovation time.
10) Are there any pending assessments in my building? If it's December-March this is a time when boards usually decide whether they will need to raise the maintenance or common charges. Make sure you double-check the maintenance and see if there are going to be any assessments imposed. An assessment is a fee the building puts forth to raise cash either to build the reserve fund or pay for capital improvements (like renovating lobby or hallways or buying a new awning) or necessary building maintenance to the building which could be a new boiler or roof. You'll need this info to accurately budget your monthly expenses.
At the end of the day, the more prepared and knowledgeable you are, the smoother the whole process will be. Then you can have fun and find the home of your dreams. If you have any other questions that I haven't touched upon here, email firstname.lastname@example.org.
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