You’re finally ready to break free from the shackles of your landlord-tenant relationship. As a homeowner, I can tell you that the process can sometimes be distressing and must be approached in a cautiously optimistic manner. But once you finally own property and put your renting history behind you, an enormous weight is lifted off your shoulders. If you are a soon to be first-time home buyer in New York City, consider the following tips:
Expect Short-Term Anxiety
Understand that buying a home can be a strenuous process. Because of the vast amount of parties involved in the purchase transaction, you are bound to come across some resistance. Whether it’s the title company, your mortgage broker, real estate broker, the seller, the co-op board, or management, someone is going rain on your parade.
When shopping for our first apartment, my wife and I found a co-op in NYC that we absolutely loved. After compiling a 300 page application for the board, paying application fees, meeting with board members and securing approval, having to interact with possibly the worst seller’s agent in New York, and after months of waiting on the closing date, our mortgage broker went M.I.A. We didn’t hear from her for several weeks. Finally, the seller’s agent, not our mortgage broker, informed us that the building stats and financials failed to meet bank approval. The only method of purchase was by cash. This of course was the fault of the bank (and a very large national bank might I add) for not doing their due diligence. My point is do not expect the purchase/sale to be a sure thing until you receive keys at the closing table. Keep expectations low and your patience high.
Make the Biggest Down Payment You Can
My monthly rent was higher than my current mortgage and maintenance fees combined. Why? I followed the golden rule of putting down as much money as I possibly could. Don’t be enticed by putting 5% or 10% down. Go big. 25% or higher. Go for a pre-qualification to see how much debt you can take on based on your credit history and income. If you can’t make a large down payment, it may be a sign that you need more time. If you would rather spend your money on fancy renovations and expensive furniture, then you may need to reconsider your priorities. Be frugal and make sure your monthly housing payment is at a level that you can handle during a potential recession or unemployment.
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