Tips for First Time Home Buyers

Buying your first home in New York City can seem like an overwhelming, intimidating and daunting task. The median price for an apartment in the City has recently reached the million dollar mark on both condos and coops and the stories of bidding wars have become common place on anything that is somewhat reasonably priced. Fear not though because my checklist will prepare any first time buyer with the tools needs to successfully purchase a unit in NYC.

Get your finances in order

On average you will need to have at minimum 20% down in order to be taken seriously. This doesn’t not account for closing costs and miscellaneous fees that you will incur along the way. One of the biggest fees associated with closing costs is the 1% Mansion tax which is incurred on any apartment sold for over $1 Million. Another large closing cost fee is the Sponsor’s transfer tax fee. This is usually associated with the purchase of New Developments, the Sponsor (developer) will place the burden of paying the NY State and NY City transfer tax fee on the purchaser. For any purchase over $500,000 this usually comes out to about 1.875% of the purchase price.
Most residential brokers or mortgage brokers can provide you with a list of estimated closing costs so that you are fully prepared.

Get your Pre Approval

A pre-approval is a written estimate from the lender stating how much you will likely be able to borrow based on an initial review of your credit and financial information. Typically you will need to submit pay stubs, bank statements, tax returns and other financial documents. Keep these handy as you will need them later on for the infamous board packages. A credit check fee will likely be incurred at this stage and will run you about $100.
It is important to have your pre- approval ready so that you know exactly how much you can afford to borrow and you will also need it to submit an offer to provide assurance to the seller that you will be able to secure financing.
Pre-approval letters typically expire between 90-120 days but are easily updated by calling your mortgage broker.

Get your Search On

With the invention of search engines such as StreetEasy it has become very seamless for clients to search for their own listings. Brokers have become more of a facilitators in the process, almost acting like a guide and helping you through the process; providing knowledge, guidance and clarity on buildings and neighborhoods.
Its important to also decide between a Co-op v. a Condo. In short, in a co-op you are buying shares in a corporation that will give you a proprietary lease in the building and a Condo you won the unit outright. The search process is the same but co-ops typically require a rigorous board package and can turn down a sale for any reason as long as it’s not discriminatory. This isn’t to discourage looking at co-ops though as they do make up about 75% of the nonrental housing stock in NYC and also are typically lower in price and overall closing costs when compared to a condo.

Get out there

I always encourage my clients to start off with visiting multiple open houses in all areas of the city. When I am working with a new client this helps me get a feel for what their preferences are when it comes to neighborhood, transportation, building amenities, ect. I cannot tell you how many times a buyer starts off saying that they will only live in a certain area and end up all the way across town. If you don’t already have an agent this is also a way to meet brokers that you may like to work with.

Final Tips in No Particular Order

Assemble your team- Residential Broker, Mortgage broker, Attorney, Home inspector. The most important though is your broker and if you don’t have one I suggest you contact me

Don’t get your hopes up- Do not fall in love with anything until the keys are in your hand. I know this sounds awful but between bidding wars and board rejections losing a unit can be heartbreaking, trust me its happened to me more times than I would like to admit and its hard to get motivated to search again once you lose out on a unit that you set your heart on.

Get Flexible and Get Realistic – In NYC you are always compromising something, whether its space, a neighborhood or even a doorman. Understand yourself and know what you absolutely cannot live without and what you can give up in order to secure an apartment. The cost of rent is only going up the time to buy is yesterday.

Get Excited- Being a homeowner in NYC Is one of the most prestigious clubs you can belong to and provides such a sense of security. The home buying process doesn’t have to be a negative one it can be a very exciting, positive and rewarding one. Finding the right broker will make this experience that much more pleasant for you.

Understand what value means to you- Price is only a number and only a home is only as valuable as you make it.