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family loans don't help when taking a mortgage. banks are real strict about that.
we gave my daughter a down payment as a wedding gift and we had endless forms and phone calls confirming it was gift and not a loan. we had to put it in writing they owe us no money.
banks count that as outstanding debt and won't loan against it or at all.. it could effect board approval as well. owing more money than banks will even give you is never good to a co-op board.
but i do agree co-ops are a good way to get your foot in the door of home ownership.
family loans don't help when taking a mortgage. banks are real strict about that.
we gave my daughter a down payment as a wedding gift and we had endless forms and phone calls confirming it was gift and not a loan. we had to put it in writing they owe us no money.
banks count that as outstanding debt and won't loan against it or at all.. it could effect board approval as well. owing more money than banks will even give you is never good to a co-op board.
but i do agree co-ops are a good way to get your foot in the door of home ownership.
If you send it six months before they use the money to buy the property there no need for documents. If you send within short time period before seeking finance and it shows on the bank records you hard a large wire transfer, you need to fill out a form clarifying the relationship, it a gift, list the bank account it came from, and the contact information of your family/signature.
It not strict, it is phony paper work the bank does because the government requires them to and as a way to protect themselves.
Co-op boards are more strict and detailed orientated than any bank would be.
At the end of the day, the bank going to sell your mortgage to an investor. There just in it to collect the fees.
a loan is a loan no matter how you want to defraud the bank and try to hide the fact . it is an outstanding debt that needs to be disclosed legally no matter when you got the money. whether you defraud the bank or the investor group that bought it the borrowers ability to pay and the credit worthiness as a loan is not as represented.
in any case i advice being honest with the bank as to all outstanding debt. you do what you want.
based on the microscope i saw 2 banks put the kids under i don't advise lying to them. they had to go to a 2nd bank when the first bank rejected the loan because they wanted to get a waiver of co-op flip taxes if they foreclosed and the co-op said no .
the 2nd bank forced them to add the flip tax amount to their down payment money up front. 4 other banks denied to loan altogether to any co-op with flip taxes over a certain percentage.. .
but the banks were pretty thorough and demanded so much documentation on debt and income..
Last edited by mathjak107; 04-05-2015 at 02:24 PM..
a loan is a loan no matter how you want to defraud the bank and try to hide the fact . it is an outstanding debt that needs to be disclosed legally no matter when you got the money. whether you defraud the bank or the investor group that bought it the borrowers ability to pay and the credit worthiness as a loan is not as represented.
in any case i advice being honest with the bank as to all outstanding debt. you do what you want.
based on the microscope i saw 2 banks put the kids under i don't advise lying to them. they had to go to a 2nd bank when the first bank rejected the loan because they wanted to get a waiver of co-op flip taxes if they foreclosed.
My situation was mostly around having the down payment and closing cost, but I didn't anticipate the amount of reserve the bank would ask for and the bank wouldn't consider the fact that I was going to rent part of the property. I had to have my parents send me money to cover the reserve, in which I sent it back to them once the house closed and found a tenant.
Anyway back on point, I pay a lot less than the tenant does to live in the property. Which shows the imbalance of home ownership vs renters. It ridiculous what considered market rate rent, but someone willing to pay it.
My situation was mostly around having the down payment and closing cost, but I didn't anticipate the amount of reserve the bank would ask for and the bank wouldn't consider the fact that I was going to rent part of the property. I had to have my parents send me money to cover the reserve, in which I sent it back to them once the house closed and found a tenant.
Anyway back on point, I pay a lot less than the tenant does to live in the property. Which shows the imbalance of home ownership vs renters. It ridiculous what considered market rate rent, but someone willing to pay it.
we are looking at a co-op in bay terrace right now. how much of a difference between buying vs renting depends on the down payment.
the co-op is 300k . it will take 50k down plus closing costs to just equal what we pay in rent per month.
i could pay cash and say buying only cost me 12k a year based on maintence while renting was 22k a year . but the reality is i would be giving up 12-15k a year in the income on the 300k i will spend. very different outcome when opportunity costs are considered. .
comparing apples to apples though there is no way in our area you are buying an equivalent co-op for the same as rent on the comparable apartment much less a lot less money unless you don't count down payments or paying cash as money spent. .
Last edited by mathjak107; 04-05-2015 at 03:30 PM..
family loans don't help when taking a mortgage. banks are real strict about that.
we gave my daughter a down payment as a wedding gift and we had endless forms and phone calls confirming it was gift and not a loan. we had to put it in writing they owe us no money.
banks count that as outstanding debt and won't loan against it or at all.. it could effect board approval as well. owing more money than banks will even give you is never good to a co-op board.
but i do agree co-ops are a good way to get your foot in the door of home ownership.
I'm in the early stages of house hunting with my girlfriend now.
I called a Bank of America mortgage loan officer to go over some questions with him.
He said they're only interested in activity on your bank account over the 60 days prior to your application for the loan. So you can be gifted an unlimited amount of money, and as long as it was 60 days before the loan, they don't care.
And if it is inside the 60 days, they would just need the person who gifted the money to sign a legal letter saying it is a gift and they have no expectation of a repayment of any sort.
edit: Oh I see you now you said a "family loan". Yes that would be counted as outstanding debt, the same as anything else.
I'm in the early stages of house hunting with my girlfriend now.
I called a Bank of America mortgage loan officer to go over some questions with him.
He said they're only interested in activity on your bank account over the 60 days prior to your application for the loan. So you can be gifted an unlimited amount of money, and as long as it was 60 days before the loan, they don't care.
And if it is inside the 60 days, they would just need the person who gifted the money to sign a legal letter saying it is a gift and they have no expectation of a repayment of any sort.
edit: Oh I see you now you said a "family loan". Yes that would be counted as outstanding debt, the same as anything else.
I think it was last three months of pay stubs and bank account statements from Wells Fargo for me. Could vary from bank to bank and things might have changed.
we are looking at a co-op in bay terrace right now. how much of a difference between buying vs renting depends on the down payment.
the co-op is 300k . it will take 50k down plus closing costs to just equal what we pay in rent per month.
i could pay cash and say buying only cost me 12k a year based on maintence while renting was 22k a year . but the reality is i would be giving up 12-15k a year in the income on the 300k i will spend. verty different outcome when opportunity costs are considered. .
comparing apples to apples though there is no way in our area you are buying an equivalent co-op for the same as rent on the comparable apartment much less a lot less money unless you don't count down payments or paying cash as money spent. .
In prime location in NYC you will have difficulties in finding any property that makes a decent ROI given the amount of competition and popularity (you would have had to buy during the financial crisis). A lot of them were in the negative when I was looking, but there still value to be had in the outer boroughs from my experience. I found balance last year in Western Queens in which the rent value was higher than the cost of ownership.
Like you mention, whether it a smart decision or not will be on a case by case basis. I think it generally sound advise to own property as most people are not wise investors and will always need a place to live.
i agree , most folks suck at investing . they have neither the discipline , the skill or more important the pucker factor to do well.
for most the eventual cost cutting ability of owning a place may be the better deal as most renters will not end up investing the difference.
with me it was the opposite , i have been a big real estate investor for decades and if i didn't rent and instead had my money tied up in a house i would have never been able to take part in some of the ventures i did
some of our investment apartments are in one of the most prestigious buildings in the city over looking central park. . our partner was one of ny's greatest real estate moguls.
but none of that would have happened had i stayed a homeowner all those years.
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. Is that why you stick out with the ghetto just to enjoy the upper class title there?
