This proven product is also available for Non-Warrantable Condos & Condotels!
What is a Co Op?
Co Op Loans are available today with great rates. Co Op Loans are available today with great rates. When you buy a house or a condominium, you are getting real property. When you buy a co-op you are not actually purchasing the physical apartment. You’re buying shares in the cooperative corporation which owns the building in which the apartment is located. You will own the number of shares allocated for that apartment based on its size and location. Instead of the deed you receive when you buy a house or a condo, with a co-op you get a stock certificate and a proprietary lease or occupancy agreement. The lease spells out the rights and obligations of the co op and the shareholder for the use and occupancy of the apartment. The shareholder becomes part owner of the building and has a proprietary lease on a specific apartment.
How is a Co Op different from a Condo?
When you get a mortgage to buy a house or a condominium, the property is collateral for the mortgage. Since you’re not buying real estate property when you buy a co-op, you are not getting a mortgage in the traditional meaning of the term. In effect, you are getting a loan to buy the shares and proprietary lease to live in the co-op unit.
Your shares in the co-op and the proprietary lease are collateral. They are not as valuable to the lender because they can’t be sold or disposed of as easily as real estate. The co-op’s board of directors may put conditions on the sale of its shares. Because Co Op Loans aren’t always available it may also be difficult to sell the shares if the building is in poor financial or physical condition. Because of this, with co op loans the rate may be higher than a standard single family mortgage rate.
How are the Taxes and Insurance pain with a Co Op?
As it is with any home or condo, real estate taxes and mortgage interest on primary residences are usually deductible on your federal income tax return. As a co-op owner, the real estate taxes and interest on the underlying mortgage allocated to your shares may be deductible. The co-op corporation notifies shareholders of the dollar amounts of these allocations annually. See your tax adviser regarding tax deductibility of interest and real estate taxes.
The common charges are the costs associated with the operation of the building, distinct from the costs of your apartment. These charges may include payments on the building’s underlying mortgage, real estate taxes, water and sewer fees, fuel costs, utilities for the common areas, salaries for building employees, insurance and the other expenses of operating the building. These costs are apportioned to each shareholder as maintenance fees, usually payable to the corporation on a monthly basis. The corporation then pays the bills.
Call us today at 424 225 2167 for terms on our Co Op Loans! One of our mortgage professionals will help you get the best possible loan solution for your situation. We’ll be with you every step of the process and not hand you off to someone else.
Why are Co Op Loans at times difficult to find?
Co-ops also require buyers to be approved by the Board of Directors of the co-op corporation. This involves preparing a purchase application which requires financial disclosures and a personal interview. Each co-op has different requirements. A buyer may be rejected without the Board having to disclose the reason…Even thou you’ve been approved for one of our co op loans.
The approval process also extends to leasing the unit. Some co-ops completely forbid it or limit it severely. Condos do not have this problem.
A really simple way to understand the main difference between the two is to think of owning a condo as owning real estate, and owning a co-op like owning a part of a business (corporation) who owns the real estate. Often a co-op is less expensive in price, but can be more involved (specific buyer qualifications) to buy. The co-op may also require you to use their appointed lender, if their not making co op loans you could be out of luck and some even require that you are approved by all the other co-owners of the co-op.
With a co-op you can get more for your money in terms of having a nicer or larger space, but likewise when it comes time to sell; it does not necessarily appreciate alongside “regular” real estate.
Our Co Op Loans are not difficult to qualify for.
The definition of a stock cooperative is as follows: Stock cooperative which means ownership of the land and buildings by a corporation, in which tenants own shares of stock and thus are entitled to an exclusive right to occupy a dwelling unit, or to lease a dwelling. So when we close one of our co op loans it’s for the purchase of stock.
A condominium is different in that the buyer of the condo has exclusively ownership of the individual unit and holds ownership as a tenant-in-common in the shared spaces.
Co-op is like an entity of its own and a potential buyer does not get a deed to his/her property. A buyer gets a certificate that is comparable to a stock certificate reflecting an ownership in a company or a corporation. There are many restrictions that co-op board can implement that might impact the value of the property.
Our Co Op Loans do not have a Pre-Payment Penalty.
Condominium on the other hand is a piece of the property in a multiunit building that is transferrable by a deed. The buyer owns that unit and in most cases can transfer the title to the property without any restrictions. Some people stated that co-ops could restrict the ability of their “owners” to rent their units. Well, the same applies to the condo owners.
A condo is “real property.” Each unit owner owns an individual apartment in perpetuity and owns an undivided interest in the common elements of the building including the exterior walls, the roof, and lobby. Ownership of a condo is more like a house and the owner will have a deed as evidence of that ownership.
A successful closing is dependent upon getting approved for one of our Co Op Loans…Before you start shopping.
Call us today at 424 225 2167 for help. One of our mortgage professionals will help you get you one of the best Co Op Loans your situation. We’ll be with you every step of the process and not hand you off to someone else.