How To Buy A House In New York

You’ve decided to make the leap and become a homeowner in New York. But before you start looking at homes, there are so many things to learn. To help you understand the process and provide you with some valuable home buying tips, we’ve created this guide to buying a home in New York. 

House, Co-op Or Condo: Which Is Right For You?

New York real estate has slightly different terminology from what you’ll find around the rest of the U.S. Are you planning to buy a house, a co-op apartment, or a condo? Do you know the difference (and why it matters?)? We’ll give you a quick overview. 

Co-op apartment: If you’re not familiar with the New York real estate scene, a co-op can be a little confusing to understand. When you buy into a co-op, you’re not buying an apartment outright that you have full control over. Instead, a cooperative corporation owns the building and you’re buying a share in the corporation. You’re then able to occupy your apartment for as long as you’re a shareholder. This situation makes for a different ownership experience: the co-op board runs the show and will decide what can be done with apartments, like who can rent them and who can own them.

Condo: When you buy a condo, you’re buying a specific unit in a building and usually access to common areas. A condo might have a board, but it’s less strict than a co-op board, giving owners more freedom and flexibility to do what they want with their property. This freedom comes with a cost. Mont Sky Real Estate estimates that condo prices are 10 – 20% more expensive than similar co-op options. 

Home: You won’t find many detached, single-family homes in Manhattan, but you will find them in outer boroughs. With a fully detached house, you usually get a little more space, a private entrance, and an outdoor area that you fully own. There is no condo or co-op board to report to.

How Much House Can You Afford?

Once you’ve decided the type of home that you want to buy, it’s time to determine your budget. Depending on where you’re looking to buy, costs can vary dramatically. If you’re buying a house, rather than a co-op, you won’t have to pass a co-op board financial review. That’s good news. 

But you’ll still need to figure out just how much you can afford and come up with a reasonable budget. To do this, you’ll want to take a look at your monthly budget – how much you currently spend and how much your current debt payments are. You’ll also want to look at how much you’ve saved for a down payment, because that will be a deciding factor as to how much the bank will lend to you. 

Learn more about estimating how much house you can afford. 

Once you know how much you can afford, it’s important to get preapproval from a lender. New York is one of the most competitive housing markets in the country, and having preapproval from a lender can help signal to a seller that you’re a serious buyer. 

The lender will look at your income, your expenses, your debt and your credit history before deciding how much they will lend you for a home purchase. If you haven’t yet checked your credit score, you’ll want to do that to make sure you have the credit score needed to buy a house. Shop around with a few lenders to see what type of mortgage rates they offer before deciding which to choose. 

If you’re buying your first investment property, you’ll need to look at other details like estimated rent, maintenance costs and rental restrictions.

Search Neighborhoods

The neighborhoods you decide to search in will depend on whether you’re looking for a detached home, or a condo/co-op. Visit neighborhoods and see what you like. Once you’ve started to focus on a few different areas, start your search online. Online listing sites will let you filter by property type, so you can look at only single-family detached homes if that’s what you’re focusing your search on.

But before you contact any of the listing agents you find online, it’s a good idea for you to find your own buyer’s agent.

Find A Buyer’s Agent

Listing agents expect that serious buyers have a buyer’s agent, so you won’t get very far in your home search without one. So before you dive into your home search, look for a buyer’s agent you’re comfortable with. If you have friends or family members who have worked with agents in the past that they like, ask them for a referral. 

Not only will a buyer’s agent make you seem like a more credible and serious buyer, but you’ll also be able to ask them for advice. This is their job and they know the market well, so ask them your questions!

Our friends at Rocket Homes Real Estate LLC can help you find a buyer’s agent who will be able to help you find a property that fits your lifestyle.^1,2

Find A Lawyer

New York is a state that requires a real estate attorney to help draw up contracts to finalize home purchases. Finding an attorney sooner rather than later is a good idea. When you find that perfect home you want to have nothing standing in your way. 

If you don’t know of any real estate attorneys you want to work with, ask your agent for recommendations. They likely have a few attorneys that they know, trust and have worked with in the past.

View Properties

Now that you have your team lined up, it’s time to view homes. Take your time and go to as many open houses and private showings as you can. The more properties you view, the more you’ll be able to figure out what you want. Take notes about what you like and what you don’t like with certain homes. This will help you narrow your search and find something that’s truly right for you.

Submit An Offer

Once you find a property that you like that fits your criteria, it’s time to write up an offer. Work with your agent to get the details together, like the offer price, closing date, and down payment amount. You’ll likely want to include with your offer your mortgage pre-approval letter and a letter to the sellers.

Negotiate

Once your offer has been submitted, you’ll wait to hear back from the seller. At this point, they may negotiate your offer if they are interested, but don’t agree with all of the terms you offered. You can choose to negotiate with them or walk away. An offer isn’t binding until both parties have signed the purchase contract. 

Once a contract is signed, you’ll need to make a good faith deposit.

Schedule A Home Inspection

If you’re buying a home, rather than a condo or a co-op, a home inspection is incredibly important. You’ll be on the hook for the roof, the plumbing and everything else, so making sure it’s in working order is necessary. If you’re purchasing a condo or a co-op, a home inspection is still a good idea, but it will cover less since you’re only responsible for what’s included within your apartment or condo.

Ask your buyer’s agent to help you find a reputable home inspection company. When you get the home inspection back, you may not understand everything that’s included in the report. This is your chance to ask questions. If there are serious problems, you’ll want to know now so you can either negotiate with the seller or walk away from the purchase.

Complete The Mortgage Process

Though you got preapproval before you made an offer on a home, you’re not done with the bank just yet. You’ll need to apply for a mortgage and submit all of the required paperwork to your lender. This process can take a while, so be prepared and reply promptly to their requests. 

They’ll typically ask for your financial documents as well as other things like the purchase contract and a home appraisal. 

Once you’ve cleared the mortgage application process with your lender, they will issue you a mortgage commitment letter stating that you’re officially approved for a mortgage.

Close And Get Your Keys!

Once all of the contingencies have been met and you’re ready to close on your new home, you’ll usually meet with your attorney to sign the final paperwork. Your lawyer will walk you through everything that needs to be signed to complete the transaction.

When everything has been signed and the funds have been wired to the seller, you’ll be able to collect your keys and finally step into your new home. 

If you’re ready to buy a home, you can get started online with Rocket Mortgage^®, or give one of our Home Loan Experts a call at (888) 452-8179.

¹Rocket Mortgage^® (also doing business as Rocket HQ) and Rocket Homes Real Estate LLC are separate operating subsidiaries of Rock Holdings Inc. Each company is a separate legal entity operated and managed through its own management and governance structure as required by its state of incorporation, and applicable legal and regulatory requirements.²Rocket Homes^SM and the Rocket Homes^SM Logo are service marks licensed to Rocket Homes Real Estate LLC. Rocket Homes Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Main office located in Detroit, MI. Contact: (888) 468-4735 For Rocket Homes Real Estate LLC license numbers, visit RocketHomes.com/license-numbers.CA BRE #01804478