A cooperative mortgage is like no other. Not only can the lender not foreclose on the apartment you'll live in, but the loan isn't even for actual property. When you buy into a co-op, you purchase shares of the corporation that owns the building. These shares are represented in physical form by the unit you live in; someone who lives in a two-bedroom unit in the building has purchased more shares than someone who lives in a one-bedroom unit. A co-op mortgage loan isn't necessarily more difficult to get, although you do need to go with a lender who is used to issuing these types of loans. However, you do need to be prepared before you start the application process.
Have Your Down Payment Ready
You need to have the money for your down payment ready and waiting when you apply. It will show that you're serious about getting into a co-op and that you've thought about your financial situation and how much you can truly afford. The lender will likely appreciate that you've prepared yourself financially first.
Investigate the Co-Op Board Before the Lender Does
Is there a specific building you've been eyeing? Get your hands on as much documentation as you can regarding the co-op board and the financials of the building. Some of this information might not be available to you until you're in the middle of the process of buying your shares. But whatever you can get now, do so, because the lender will too. And you want to be very sure that the board of the building you're interested in is in great financial shape and doesn't have any negative marks that might make the lender balk.
Look at Some Spaces First to Be Sure Co-Ops Are for You
If you're from New York or another city where co-ops are a major form of housing, you likely already know what to expect. You might have restrictions on remodeling or what you're allowed to do in this space that you're "buying." If co-ops are relatively new to you, however, you may want to talk to your real estate agent about looking at a few units first so that you know what the available stock is like. For example, if you see that the co-op units in your estimated price range need a lot of renovations, be sure you're ready to take on that work assuming the co-op board allows it. Once you're sure you're ready to purchase shares, you can apply for a mortgage loan with confidence.
For more information on cooperative mortgage loans, contact a lending company such as Golden Rain Lending.
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