Co-ops are very common in New York City. They differ from condos in that they are owned by an apartment corporation. An individual purchasing a co-op is purchasing shares of the buildings corporation and is known as a shareholder. Shareholders in the corporation are then entitled to a long-term proprietary lease. Shareholders cannot have their lease terminated as long as they abide by the terms of the lease. Co-ops are not subject to real estate laws so there are no deeds, mortgage notes or title insurances.

An individual shareholder owns a percentage of the total shares within the corporation. The larger the apartment, the higher the percentage of shares the individual will own.
Co-op owners pay a monthly maintenance fee to cover their portion of the co-ops management and operating costs. Since maintenance fees include real estate taxes and insurance, as well as principal and interest on the underlying mortgage, portions of the monthly maintenance fee are tax deductible (consult with your accountant for details).

The process of buying a co-op also varies from a typical home purchase. The co-ops Board of Directors must interview the prospective buyer and perform a financial screening. The Board sets a minimum down payment, usually between 20-25% of the purchase price. Some co-op boards require as much as 50% down in the more affluent areas of New York City.

To obtain financing for a co-op, the loan must conform to the amount of financing that is acceptable under the terms of the boards agreement. The loan is then secured against the shares that the buyer is purchasing in the co-op.

Commodore Mortgage Group can offer a variety of programs to help you obtain financing for a co-op. We work with over 50 mortgage lenders so we can offer the most competitive rates to suit your financial needs.

The process of buying a condo is just like buying a home. The purchaser owns the apartment outright and receives a deed. The buyer pays a separate tax for their apartment. In addition, there is a monthly common charge that is similar to a co-ops maintenance fee. Common charges are not tax deductible and do not include your real estate taxes. They are used specifically to cover the buildings maintenance fees.

The monthly combined common charges and real estate taxes for a condo are generally less than a co-ops monthly maintenance fee, resulting in higher purchase prices. The fact that there are fewer condos on the market and that they are easier to purchase than a co-op also puts them in high demand.

The application process for a condo is simple. An interview with the board is not required because the board cannot reject sales or rentals. Financing for condos is very flexible and usually has the same interest rates as a single-family home. Condos can be financed up to 90% of the purchase price. If a borrower finances 75% of the purchase price or less the bank will not conduct a review of the buildings finances. Banks generally accept condos that are 90% occupied.

Buying a condo is often a smart investment. They are easy to rent/sub-lease and are less expensive to carry with no underlying mortgages. If youre interested in purchasing a condo, we at Commodore Mortgage Group will walk you through every step of the financing process, to ensure you get the best loan options to meet your needs.