Are you looking to purchase your first apartment in NYC? Tired of paying your landlord's rent. Then these tips are for you!
1. Save!
Buying your first apartment in New York City is incredibly capital intensive. You should expect to have 20% of your down payment in cash. This isn't like the old days where you could even finance your down payment. So let's say you're looking for something in the $600K range for your first apartment purchase in NYC. That means you should have $120K in cash to put down. Keep in mind, this money shouldn't represent absolutely everything you have in your bank account. You will need to pay for closing costs, lawyers fees and taxes. You can estimate approximately an additional 5% in closing costs. You will also need additional savings in your bank account, as you don't want your purchase to deplete all of your liquid assets.
Given the high cost of living in NYC, this can be a deal breaker for most. However, fear not! You may have low savings and a high income. This means you could theoretically front a higher monthly payment, at the benefit of putting less money down. You may be eligible for a 10% down loan. However, keep in mind that 10% down loans will not fly with most co-op boards.
2. Keep Good Credit
Don't have a perfect 850 credit score? Not a lot of people do, but not to worry. You don't need a perfect score, but the closer you are, the better your financing terms. That means you should always be paying your bills and your credit card statements. Even being late can count against you in your quest for your first apartment purchase in NYC. Again, it's not about being perfect. Just do your best to get your credit score in check.
For some people, simply building credit may be the first challenge. This means you will need to get a credit card or some other line of credit to establish a credit history. If you apply for a mortgage with no credit history, this can be as challenging as having bad credit, except much easier to solve!
So how does credit impact your financing terms? Credit scores ranges from 300 to 850. The closer you are to 850, the lower your interest rate will be. The further away from 850, the higher your interest rate will be. Simple as that. Remember, high interest rates make it much more expensive to own.
3. Work with a Mortgage Broker to get Pre-Approved
A mortgage pre-approvel is simply a document that gives you a baseline understanding of what price range you will be able to afford for your first apartment purchase in NYC. The mortgage broker will take into account all of your assets (cash, stocks/bonds, retirement savings, etc...), all your debts (existing loans, school debt, credit card debt, etc...), credit score, and your income to determine how much you can borrow and at what approximate interest rate.
One important thing to remember is that this pre-approval is completely non-binding. It simply allows you to understand what price range you can afford. A pre-approval will also make you seem like a smart, prepared buyer when you're ready to submit an offer. Once you're ready to move forward with a purchase, you can go back to the same mortgage broker and then work towards going through the mortgage underwriting process in its entirety.
4. Work with Blooming Sky to Identify your Real Estate Needs
Creating a preliminary wish list is the first step to a good house hunting experience. This is where we have to consider all your wants, which can consist of the price range, neighborhood, type of space, amenities, co-op vs. condo and so forth. Buying your first apartment in NYC can be riddled with overwhelming choices, but this should be a fun exercise.
As we work to find you apartments that match your needs, you will start honing in on the things that are most important to you. This will allow you to pull the trigger when the right property comes your way.
5. Be Prepared to Lose out on Good Properties...Don't Give Up!
Finally found something that was absolutely perfect? Placed a bid only to be outbid? This happens all the time! Don't lose hope. While it can be disappointing, don't let it upset you for too long. There are more apartments out there waiting to be seen.
The apartment purchase process in NYC can be incredibly stressful, but with the right people by your side, it can also be a calm, fun experience. At Blooming Sky, our goal is to make sure you have the best experience possible.
