Financing for Co-ops
Options for Financing
Financing for a co-op in many ways seems similar to other property types. Typical financing available for a co-op include 30 year fixed rates, ARMs, Interest Only Options, First time Buyer Programs, and Jumbo mortgages.
The difference is that most lenders refer to the financing as a mortgage, but the reality is that they are actually considered "share loans". That is, the buyer is financing the shares that they are purchasing in the corporation (the co-operative). The lender then takes the original stock certificate and proprietary lease as collateral in the transaction. Once the loan is paid in full- either at the time of sale or refinance, the documents are returned to the borrower or assigned to the new lender.
The difference is that most lenders refer to the financing as a mortgage, but the reality is that they are actually considered "share loans". That is, the buyer is financing the shares that they are purchasing in the corporation (the co-operative). The lender then takes the original stock certificate and proprietary lease as collateral in the transaction. Once the loan is paid in full- either at the time of sale or refinance, the documents are returned to the borrower or assigned to the new lender.
At Co-opApartments.com, we don't finance individual co-op apartments, but you can get more information at CrossCountry Mortgage (https://crosscountrymortgage.com/pittsford-ny-5652/patrick-lavell/) or by calling Pat Lavell at (585)233-3005.
Financing for the Building
Most co-ops eventually need help with financing for the entire building. Such a loan is referred to as an Underlying Mortgage. The typical Underlying Mortgage are commercial loans and therefore require balloon payments. This means that they only lasts 5 -7 years before they have to be refinanced. In addition, Local Law 11 and other NYC structural requirements mean that capital improvements need to be regularly completed to comply with the City. Without the improvements being completed in a timely manner, buyers may have difficulty financing the purchase or refinance of an individual apartment. We can help with the Underlying Mortgage! Call us at (917)277-3363.