How much money do I need to buy an apartment in New York City?
We will demystify this topic in the following video.
I'm Nick at Hauseit, visit our website www.hauseit.com to learn about ways to reduce your closing
costs and save money when buying and selling in NewYork City.
So lets get started.
You need to have 22 to 26% of the purchase price saved for a condo and 21 to 22% of the
purchase price saved for a co-op.
Assuming 20% down to buy an apartment in New York City.
These figures exclude Mortgage Lender Reserve Requirements which are usually 6 months of
housing payments.
These figures also exclude any Post Closing Liquidity Requirements of your co-op which
are typically between 1 to 2 years of monthly housing expenses.
Typical buyer closing costs are around 4% for condos and 2% for co-ops.
They are closer to 6% or more for new construction properties.
So in short, how much money you need to buy an apartment in New York City depends on whether
you're buying a condo or a co-op, the size of your down payment and whether you're financing
the purchase.
You can estimate your buyer closing costs in New York City using Hauseit's interactive
Buyer Closing Costs Calculator and you can find that at www.hauseit.com.
As the calculator illustrates, buyer closing costs are lower for co-op apartments compared
to condo apartments.
And this is especially the case if you're taking out a mortgage.
This is because many traditional buyer closing costs which include the mortgage recording
tax and title insurance do not apply to co-op apartments, and this is because co-ops unlike
condos and houses are not considered to be real property.
Instead of receiving a traditional deed buyers of co-ops receive a co-op share certificate
and a proprietary lease and the ownership is considered to be personal property instead
of real property.
How much of a down payment do I need for co-op?
Well the most common down payment for a co-op apartment in New York City is 20% of the purchase
price.
Exact down payment and financial requirements vary by co-op building.
However it is very rare to find a co-op in the city which permits anything less than
20% down.
Buying a co-op in New York City actually requires you to have much more than just the down payment
and closing costs in liquid assets.
And this is because most co-op buildings require you to have liquid asset reserves of at least
1 to 2 years of housing expenses after closing.
And most buildings exclude 401Ks and other tax deferred retirement assets when calculating
this metric.
You may wish to consider obtaining a gift from a family member to fortify your overall
finances if you are a bit short in meeting the Post Closing Liquidity Requirement for
a co-op.
Since not all co-op buildings permit gifting, your buyer's agent can verify the co-op's policy
by checking with the listing agent or the building's managing agent directly.
Receiving a gift is as simple as preparing a gift letter and submitting this along with
you're co-op offer and including it as part of your co-op board package once you've signed
the contract.
You can download a template co-op gift letter by visiting www.hauseit.com.
How much do you have to put down to buy a condo?
It's possible to put down 10% or less on a condo apartment in New York City.
Although some condo buildings have minimum down payment restrictions.
The specific down payment rules vary by condo in the same way that the specific down payment
rules would vary by co-op.
If a building has no minimum, you can put down as little as the bank and the seller are willing
to allow.
Now keep in mind that most sellers in New York City won't necessarily feel comfortable
accepting less than 10% down unless they're having a really tough time finding a buyer.
Condos have higher buyer closing costs than co-ops, so part of the cashflow advantage or
savings of making a lower downpayment with a condo will be offset by higher buyer closing
costs.
Its also important to understand that condo buildings still may have certain sublet restrictions
and other house rules which have some resemblance to what you find and may expect with co-ops.
So whether you're buying a condo or a co-op, the devil is in the details.
Rules do vary by building so its important to have a great buyer's agent to help you
with the process to help you decipher and discern the various rules that you might find
across buildings including the flip tax, subletting restrictions, down payment requirements and
other house rules.
We hope you found this video helpful.
I'm Nick at Hauseit. Visit our website www.hauseit.com to learn about ways to save money when buying
or selling real estate here in New York City.
And if you like this video leave us a comment, like and subscribe and we'll see you on the
next one.