Thinking about buying an apartment is exhilarating no matter where you live in the country.
If you are searching for your dream apartment in New York City, you’ll need to prepare for a complicated journey along that apartment buying process.
A significant step you can take in setting out on your apartment buying journey is to have an Interactive Realty Solutions real estate agent educate you about the market, customs and procedures of NYC real estate transactions.
You’ll be devastated if you find the ideal apartment and lose the opportunity because you weren’t prepared.
Here’s what you can expect from the apartment buying process in New York City.
- Understand Credit Scores and Debt-to-Income Ratio
- Step Two: Be Prepared to Provide Extensive Documentation
- Step Three: Getting Pre-Approval for Your Apartment Mortgage Loan
- Step Four: Finding the Right Real Estate Agent in New York City
- Step Five: Offers and Negotiations
- Step Six: The Closing Process
- Have Questions? Ask Interactive Realty Solutions
Understand Credit Scores and Debt-to-Income Ratio
Before you search for apartments it’s best to get your credit in order. Make sure your credit score will enable you to qualify for an apartment mortgage loan.
In most cases, your credit score should be 620 or higher. If your credit suffers from a score of less than 620, you can improve that score by paying off debts, settling old accounts, and obtaining documentation of settlements. Your Interactive Realty Solutions real estate agent can introduce you to a credit repair specialist if necessary.
Your debt-to-income ratio, or DTI, also factors in your ability to qualify for a mortgage. The debt-to-income ratio shows the amount of debt, including your new mortgage, you owe, divided by the amount of income you earn. Your DTI should be lower than 36% to qualify. You can lower your DTI by paying down debts.
To qualify for an apartment mortgage loan, unless you use a Federal Program, you’ll need at least a 10% and probably a 20% down payment, cash-out-of-pocket, on the purchase price of your new apartment.
Step Two: Be Prepared to Provide Extensive Documentation
When you enter the loan application process, you’ll be asked by lenders to provide a heaping amount of documentation. If you don’t have this paperwork in order before you apply, you could delay your approval.
Lenders will ask for months’ worth of bank statements from your financial institutions – including checking, savings, and investment accounts.
You’ll need to provide a month’s worth paystubs along with employer contact information, two years’ worth of tax returns, and credit statements for all loans, lines of credit, credit cards, and if a tenant rent-payment statements.
You’ll need to account for any substantial funds that aren’t (or were not) in your savings account. For example, if a family member gave you help with the downpayment, you may be required to provide a gift letter.
In addition to financial documentation, you may also be asked to provide marriage certificates, divorce settlements, and child support statements. Furthermore, you’ll need to disclose any liens, bankruptcies, and judgments.
Step Three: Getting Pre-Approval for Your Apartment Mortgage Loan
Your Interactive Realty Solutions real estate agent can make recommendations of bank lenders or mortgage brokers to you. It’s important to have your pre-approval (not a pre-qualification) letter in hand. Then, you’ve armed yourself with purchasing power and not just a pipe dream.
Sellers will take you more seriously if you have a pre-approval letter, especially if you request a financing contingency.
Be advised: during this application process, do not make any major purchases on credit, do not close down any credit card accounts, and do not change employment as the lender may check your credentials repeatedly – up to the last day. Any new debt or job change could disqualify your loan.
Step Four: Finding the Right Real Estate Agent in New York City
As a buyer, you’ll be glad to know you’re not responsible for paying real estate brokerage commissions. It’s the seller’s responsibility to compensate the broker and real estate agents. You are well advised to have your own real estate agent represent you, even when you find an apartment listing yourself.
Your Interactive Realty Solutions real estate agent will know the ins-and-outs of the neighborhoods in which you’d like to live, median home prices, and can help you understand market conditions. Then, he or she will take your apartment buying criteria and match you with qualifying properties in your area and price point.
When you’re ready to get to the nitty-gritty and put an offer in on an apartment, your agent will help you construct a viable offer. Next, your agent will assist with negotiations and preparing paperwork.
Your real estate agent will help you keep track of important deadlines; and be able to provide references for service providers such as an attorney and insurance agent.
Step Five: Offers and Negotiations
Even in today’s buyer’s market, competition for the best apartments in New York City is fierce. When you find the perfect place to hang your hat, don’t delay in submitting a competitive offer with the help of your real estate agent.
Be prepared to face bidding wars and negotiate your terms. Contingencies, such as selling another house first, or asking for a prolonged or expedited closing date could knock your offer out of the running. Trust your agent to guide you through this complicated process.
Having your preapproval letter before submitting offers may give you an edge in a bidding war and might also expedite the closing process.
When your offer is accepted, your attorney will provide an estimate of closing costs, which is subject to change. About three days before closing, you’ll receive a list of actual expenses.
Step Six: The Closing Process
From the time you sign a contract with the seller until when you get your keys, will take approximately 60-90 days – sometimes with cooperative apartments it may take even longer to get through the Board Approval process.
During the closing process, the apartment you’re buying will undergo an appraisal required by the lender. The evaluation assures the lender that the home that you’re buying is worth the amount that you’re borrowing.
In conjunction with the appraisals and inspections, typically included in the buyer’s closing costs, an attorney will review the real estate contract between you and the seller. A contract is binding once the seller countersigns and it is delivered back to your attorney.
The closing table is where the parties involved meet on the agreed-upon date of closing. At the closing table, you finalize the sale by paying for the apartment and the deed to the condominium or the shares to the cooperative are transferred.
In conjunction with the appraisals and inspections, typically included in the buyer’s closing costs, an attorney will review the real estate contract between you and the seller. You or the seller can still cancel the contract during this 72-hour window.
The closing table is where the parties involved meet on the agreed-upon date of closing. At the closing table, you and the seller sign contracts to finalize the sale and the deed is transferred.
Finally, after the long, challenging journey, you’ll receive the keys to your new condominium or cooperative apartment in New York City.
By working with your Interactive Realty Solutions real estate agent from the beginning, your agent can advise you as you “quarterback” your transaction.
Your agent can help you analyze and if necessary work on your credit, debt-to-income ratio; and look at your liquid assets before helping you find the best lender for you and your situation.
Your agent can advise you while obtaining a pre-approval letter for your apartment mortgage loan.
Your agent can help you search for appropriate apartments which fit your needs; and then arrange appointments for you to view the apartments.submit and negotiate offers and help arrange other required services to complete your transaction.
Lastly, your agent can accompany you to the closing to help smooth over any last minute issues as you sign documents, pay for the apartment and closing costs so you can collect the keys to your new place.
The apartment buying process in New York City is both complicated and rewarding. Your Interactive Realty Solutions real estate agent will gladly advise and help you every step of the way.
Your most significant advantages are educating yourself and following the order of things – and working with a highly qualified real estate agent in your area.
Have Questions? Ask Interactive Realty Solutions
Interactive Realty Solutions is the best source of information about the local community and real estate topics. Give them a call today at (917) 341-2797 to learn more about local areas, discuss selling a house, or tour available homes for sale.