--- Apologies to those who already read this in Sales, I didn't put it in the proper place initially ---- I plan to purchase a co-op in NYC soon (as in, want to make an offer as soon as I can get a pre-approval.) I currently have a house in New Jersey that I do not intend to sell at this time (purchased 15+ years ago; now we're downsizing and moving back to NYC but my kids will continue to live... [more]
--- Apologies to those who already read this in Sales, I didn't put it in the proper place initially ----
I plan to purchase a co-op in NYC soon (as in, want to make an offer as soon as I can get a pre-approval.) I currently have a house in New Jersey that I do not intend to sell at this time (purchased 15+ years ago; now we're downsizing and moving back to NYC but my kids will continue to live here and pay "rent," covering the mortgage.)
Also, I am still paying 2005 interest rates and intend to take advantage of the much lower interest rates available, especially with now improved FICO scores.
FWIW, we have one credit card with less than $200 balance, one car paid in full and no other revolving debt. If necessary, we could pay both mortgages (as I've read enough here the past few weeks to know that they do not count rental income towards the mortgage, however, not sure how that works when the "renters" are people who already live in the house).
I am not certain of how this whole thing should be timed however, and was hoping for some advice on this whole thing. Refinance first, and then seek the second mortgage? Or the other way around, and/or does it matter? If the renters are our children, is it still treated like investment property? As much research as I've done, I haven't really found anything that fully addresses what I want to do.
Thanks in advance for any (and all) advice -
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Response by wanderer
about 15 years ago
Posts: 286
Member since: Jan 2009
Refi before you look for a second mortgage.
Get your current property in order before you move onto the next. Have your kids prepared to sign a lease. Treat it like an investment property not some family arrangement. Banks and coop boards want to hear about tenants with leases. They dont want to hear about family arrangements. Refi now as refi on investment prop (which is what it will be) is a higher rate than on a primary home.
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Response by NYCee
about 15 years ago
Posts: 16
Member since: Oct 2010
Wanderer - thank you, that is right to the point, clear and pretty much what I needed to hear. That makes sense, doing it that way. That was basically my inclination, but really wasn't sure if it would be a barrier towards getting a new mortgage. It doesn't sound like it would be, so there's my course of action.
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Response by lovetocook
about 15 years ago
Posts: 171
Member since: Sep 2010
We're in the same situation. The co-op board wanted to know what our expenses on the house (utitilies, insurance, etc) was and added it to our co-op expenses to make sure we could afford the co-op. So, if the kids are only paying the mortgage and not the other expenses for upkeep the board may want to know. But each board is different so they may not ask.
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Response by NYCee
about 15 years ago
Posts: 16
Member since: Oct 2010
Lovetocook - if you don't mind sharing, what was your situation? Did you have to present notarized documents, actual leases, proof of payment, etc? Were you renting out your former primary, or you also had relatives remaining behind?
FWIW, the rental amount my sons are splitting will cover mortgage, insurance and taxes. When my daughter graduates and returns next summer her share will more than cover those costs, and will be added to the principle. They will be responsible for splitting the utilities. I'm making the assumption though that my package has to have reserves of at least 6 months min to cover everything and probably a year, for both places.
Does (anyone) happen to know if 401K/457 funds are considered sufficient for reserves, or if it must all be liquid?
Whew. Doing this simultaneously with a refi is making my head spin, but as long as you have to do so much paperwork, might as well do it all at once.
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Response by lovetocook
about 15 years ago
Posts: 171
Member since: Sep 2010
My situation is slightly different. My house is fully paid off but I had to show proof of no mortgage and as part of board pkg detail total expenses pre and post purchase. That meant including utilities, real estate taxes, insurance, etc. This was because i was not selling my house but using it as a second home. But they also allowed me to estimate the value of my house as part of my assets so that helped substantially. Each board package is not the same. This purchase asked a lot more than my first co op purchase which never asked about the house even those the co op was a pied a tier. So it really depends on the building you buy in.
Previous postings on this board indicated that 401k/retirement funds were not really considered by co op boards so I didn't bother including it as part of my assets.
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Refi before you look for a second mortgage.
Get your current property in order before you move onto the next. Have your kids prepared to sign a lease. Treat it like an investment property not some family arrangement. Banks and coop boards want to hear about tenants with leases. They dont want to hear about family arrangements. Refi now as refi on investment prop (which is what it will be) is a higher rate than on a primary home.
Wanderer - thank you, that is right to the point, clear and pretty much what I needed to hear. That makes sense, doing it that way. That was basically my inclination, but really wasn't sure if it would be a barrier towards getting a new mortgage. It doesn't sound like it would be, so there's my course of action.
We're in the same situation. The co-op board wanted to know what our expenses on the house (utitilies, insurance, etc) was and added it to our co-op expenses to make sure we could afford the co-op. So, if the kids are only paying the mortgage and not the other expenses for upkeep the board may want to know. But each board is different so they may not ask.
Lovetocook - if you don't mind sharing, what was your situation? Did you have to present notarized documents, actual leases, proof of payment, etc? Were you renting out your former primary, or you also had relatives remaining behind?
FWIW, the rental amount my sons are splitting will cover mortgage, insurance and taxes. When my daughter graduates and returns next summer her share will more than cover those costs, and will be added to the principle. They will be responsible for splitting the utilities. I'm making the assumption though that my package has to have reserves of at least 6 months min to cover everything and probably a year, for both places.
Does (anyone) happen to know if 401K/457 funds are considered sufficient for reserves, or if it must all be liquid?
Whew. Doing this simultaneously with a refi is making my head spin, but as long as you have to do so much paperwork, might as well do it all at once.
My situation is slightly different. My house is fully paid off but I had to show proof of no mortgage and as part of board pkg detail total expenses pre and post purchase. That meant including utilities, real estate taxes, insurance, etc. This was because i was not selling my house but using it as a second home. But they also allowed me to estimate the value of my house as part of my assets so that helped substantially. Each board package is not the same. This purchase asked a lot more than my first co op purchase which never asked about the house even those the co op was a pied a tier. So it really depends on the building you buy in.
Previous postings on this board indicated that 401k/retirement funds were not really considered by co op boards so I didn't bother including it as part of my assets.