The best time to plant a tree was twenty years ago. The second best time is now.Chinese Proverb
We advise our clients to begin their search four to six months before their target move date. We plan with our clients to leverage their qualifications and financing options so they can immediately make their best offer when they find the right home. The NYC real estate market is extremely competitve. The most desirable and affordable apartments can go to contract in a matter of days.
Finacial qualifications for a mortgage may be different and less rigid than those from a coop board or condo association. Generally you should be able to borrow two to two and a half times your gross annual income. If you have significant liquid assets you may be able to borrow more. Monthly mortgage and maintainence should not exceed one month gross salary.
Your credit history is extremely important and can affect the interest rate of your mortgage. We advise our clients to review their credit reports from the three major reporting bureaus making sure there are no inconsistencies and scrubbing negative information before applying for pre-approval for a mortgage.
Pre-qualifying is the initial step in the mortgage process and it is generally fairly simple. You provide a bank or lender with your overall finacial picture including your debt, income and assets After evaluating this information a lender can give you an idea of the mortgage amount you can qualify for. Pre-qualification can be done over the phone or internet and there is generally no cost involved. Pre-qualification does not include an analysis of your credit report or an in depth look at your ability to purchase a home. Because it is a quick procedure and based only information you provide to the lender your pre-qualified amount is not a sure thing, it is just the amount for which you might expect to be approved. For this reason being a prequalified buyer doesn't carry the same weight with a seller as a pre-approved buyer who has been more thoroughly investigated.
Pre-approval is the next step in the mortgage process and is more involved than pre-qualification. You will complete an official mortgage application and usually pay an application fee. You will provide the lender with the necessary documentation and authorization to perform an extensive check on your background, finances and credit history. From this a lender can tell you the specific mortgage amount for which you are approved. You will also have a better idea of the interest rate you will be charged on the loan and in some cases you might be able to lock in a specific rate. After pre-approval your lender will provide you with a conditional commitment letter for an exact loan amount. Obviously, this puts you at an advantage when dealing with a potential seller. A seller will recognize your offer is serious and not contingent upon financing.
Financial statements prepared by a CPA and your conditional commitment letter from your lender. Financial statements should designating the buyer's net worth itemizing assets, liabilities, salary and bounus'. The most qualified offers are generally the offers that are accepted.
You will need an attorney to take your accepted offer into contract. It is best to select an attorney specializing in the New York City real estate market. We can recommend several attorneys we have successfully worked with.
An accepted offer will be great news and an indication that you are closer to your goal but it is not binding on you or the seller. Immediately after your offer is accepted you will want to arrange for a home inspection while having your attorney work with the sellers attorney to take your accepted offer and construct a Contract of Sale. Once the Contract of Sale is signed by both parties you are " In Contract " and you have a binding agreement.
To over simplify, a closing is the last step of buying and is structured as a meeting with you, the seller, representative brokers, representative attorneys and title closer. At the closing you are paying the seller for ownership of the property.
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