8. Timeline – Buying a Coop is much different than buying a Condo or Residential home in Queens. The process is longer from contract to close, mainly because of the Coop application process. This application process is usually very involved and requires a lot of work on the buyer’s part. On average, you can expect at least 3 months from contract to close, maybe two months of it is an all cash deal. We have seen some deals get delayed and prolonged for up to 5 months so be prepared in case it drags out.
1. Down Payment – Most Coops will require down payment of at least 20%, so if you are looking to buy a Coop, your best bet is to make sure that you have at least 20% down + Closing costs and additional reserves after the purchase. Otherwise you will be limited to the very few 10% down Coop developments in Queens, or you may need to speak with your loan officer to see if you can qualify to purchase a Condominium.
2. Debt-to-Income Ratio – Some Coops have specific DTI requirements in order to qualify to purchase in their developments. Make sure you ask if there is a DTI requirement, and if so, what it is. Sometimes Coops will not have a set DTI requirement, but even in those cases, we advise buyers to keep their DTI below 34%. This is a rule of thumb in Queens, and if you can stay below this number, you will look good on paper which will help you when your application goes to the management company.
3. Employment History – Most Coops like for prospective purchasers to show a good length of employment, and some even have a minimum requirements for an applicant’s employment history. So, if you’re looking to buy a Coop, make sure that you have been with the same Employer or in the same line of work for at least 1-2 years. Otherwise, you will likely face challenges getting passed management companies.
4. Income Requirements – Some Coops have specific income requirements to purchase in their development. These can vary drastically from development to development so make sure you ask if there is an income requirement. A good rule of thumb is to just make sure your income is consistent over the last 2+ years. If there are drastic changes or variances in your income (increase or decrease), it may raise a red flag to management companies when they review your application.
5. Adjusted Gross Income – Most Coops will ask for, and review, your last two years tax returns as part of the application process. When they do this, they will most likely review your Adjusted Gross Income because this is the amount reported after all credits, deductions, etc. This is especially true if you are self employed or a business owner, so before buying a Coop, make sure that your AGI is consistent and solid. If you write all of your income off, it may also raise a red flag to management companies when reviewing your application.
6. Credit History – Most Coops will request a full credit report as part of the application process and when they review your application, they will most likely review your credit scores, open accounts, and overall history. So, if you have derogatory items or negative credit history, it may raise red flags to management companies as well.
7. Reserves after Purchase – Some Coops will require that you have a certain amount of funds left over after the purchase of the apt. This is aside from your down pmt and closing costs, so it is advisable to make sure you have reserves left over after the closing. Otherwise, upon review of your application, a management company may become concerned that you are wiping out all of your savings on the apt.
Hope this helps you in your House Hunt!
If you need any help with your Coop search, feel free to contact us and we can arrange a free Queens Home Buyer consultation with one of our Coop specialists