Mar 31, 2014

Dos & Don'ts For Home Buyers

The following Dos and Don't for Buyers comes from a lenders perspective. For Manhattan coop buyers finances will be even more scrutinized by the coop board than by the lender. 

Most coops have even more stringent financial requirements than lenders so don't assume that a loan commitment from a lender will  necessarily approve you  for a coop purchase. A Co-op board will require complete financial disclosure. They will look into your financial history, current and past income, assets, liabilities and references when evaluating your board package.

Dos & Don't s For Buyers


·    Continue to make housing payments on time: Until closing is set, continue to pay your mortgage or rent in a timely manner.

·    Stay current on all of your bills: Maintain good credit by paying bills on time.

·    Verify all information on your credit report: Request a copy of your credit report to verify the accuracy of the information in your accounts.

·     Make yourself available for conference calls with creditors: Depending on the accuracy of your report and the time line of settlement, credit companies may need to verify further information via conference calls. Remember - your credit may be pulled prior to the closing of your loan.

·     Save pay stubs and bank statements: Underwriters will require no less than two consecutive months of pay stubs and bank statements for qualification purposes.

·     Alert your lender if your job, salary, or compensation changes: If your income changes during the application process, alert your mortgage advisor immediately.


   Establish any new credit:
1.   Apply for, or open new credit cards: Opening new credit will not only add additional inquiries to your report, but will also negatively impact your score. Even if an account reflects a zero balance, a trade line has been added to your report.
2.   Co-sign for a loan or line of credit: When co-signing for a loan or line of credit, the payment will show up on your credit report and count against your debt.
3.   Don't misrepresent anything. Don't omit negative information. It is better to be upfront and explain something derogatory from the past in coop board package than to have the board discover it.

·    Close or consolidate credit card accounts: Closing credit card accounts or consolidating debt can have a negative impact on your score as a result of decreasing your credit capacity.

·     Increase balances on your existing accounts: Because a new report may be pulled just days before closing, the updated balances will be reflected resulting in resubmission of the loan. This may cause not only a delay in settlement, but can also result in a denial of the loan.

·     Make large deposits or transfers without proper documentation: Lenders require a “paper trail” for any large deposits or account transfers. (Acceptable documentation includes but is not limited to deposit slips, copies of checks, loan paperwork, etc.)

 Typical Co-op Board Requirements: (what the board is looking for)

  • 1. 25-30% Income to debt ratio. Housing costs should not be more than 25% -30% of income depending on the particular coop.
  • 2. At least 1 years worth of mortgage + maintenance in liquid assets or two years of maintenance after closing costs
  • 3. Increase in salary from previous year, potential future earning. 

Tips to Help Pass A coop Board Interview


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