Chances of Getting Approved

I don't think you're a good candidate at 43% DTI, but of course everything depends on specifics. (I too am self-employed, and I'm sitting in my co-op right now). If you have three years' in reserve, can't you just up your down payment so that you can take a smaller mortgage and come in to the board with better ratios? That's what's typically done.

ali r.
DG Neary Realty

curious? would a co-op accept an all cash buyer?

with no income?

Brooks2: Probably, if the buyer's cash reserves were sufficient. The Board might make approval contingent on an escrow deposit to cover future maintenance and other expenses.

Of course the housing expense:income ratio of infinity might serve as cover for rejecting a buyer whose lack of disclosed income raised other red flags. Boards are generally wary of drug dealers and prostitutes, but there are certain questions one just doesn't ask.

"Hello-I am seriously considering buying a co-op, probably on the UES in the $200-250k range. But, I am very concerned about wasting my time because I am self-employed and my debt to income ratio will be at 43%+/-."

I don't care how "well" you think you'll interview, I guarantee with those numbers won't even get you to first base; the board will reject you without even requesting an interview.

***

"My occupation is recession proof because I liquidate businesses and I have been doing the same thing for 18 years."

LOLOLOL!!!! Uh huh. I can introduce you to at least three people I know personally who've been out of work for close to two years now -- all of whose jobs were "recession proof" -- and none of whom had fewer than 20 years of experience.

***

On a scale of 1-10 what are my chances of getting approved??? Should I even bother???"

Your chance of even getting to the interview stage is at best a 2.

Don't bother. Keep renting.

so if someone was not a criminal.. (had good references)... had no debt-- variable income(but say zero or very little for argument sake) how many years of maintenance and other expenses would an average board require to be but in escrow..

I think this is relevant to the housing market in Manhattan(if with incomes coming down and bonuses getting smaller and smaller not to mention the downsizing of the financial industry). I wonder where will all the buyers come from with all these co-ops on the market with all the restrictive boards..

"so if someone was not a criminal.. (had good references)... had no debt-- variable income(but say zero or very little for argument sake) how many years of maintenance and other expenses would an average board require to be but in escrow.."

If you have virtually no income -- and no plans for any kind of income in the future, we're going to want to see an asset pool that can generate enough interest income to meet living expenses (not just maintenance payments) in perpetuity.

That is, assuming no mortgage and your "housing" (maintenance) is 1/4th of your total living expenses, if your monthly maintenance was $500, we'd want to see an asset pool that could generate $2,000/month.

That means if you're not of retirement age and don't qualify for a pension (or Social Security, disability, etc.), you're going to need at least $1,000,000 in the bank to generate $24,000/year in living expenses indefinitely.

***

"I think this is relevant to the housing market in Manhattan(if with incomes coming down and bonuses getting smaller and smaller not to mention the downsizing of the financial industry). I wonder where will all the buyers come from with all these co-ops on the market with all the restrictive boards."

They'll come from where they always came from.

---They'll come from where they always came from. right......

Please tell Cuomo and Bloomberg that when they balance they budget.. oh Obama too

Look for sponsor sales if you really want to be in a co-op.

--Look for sponsor sales if you really want to be in a co-op.

Why?

Because sponsor sales are not contingent upon board approval. The buyer completely circumvents the board approval process.

A majority of residents in my small building are self-employed, and our board is much more lenient than most.

In this instance, we'd want to see A LOT more savings than 3 years' mortgage and maintenance - 5 or 6 is probably the minimum, in addition to well-funded retirement accounts.

Brooks2: I've never seen an all-cash buyer with NO income. Such a buyer COULD have very minimal income -- for example, an artist who lives off family trusts which are invested for principal protection may simply draw down what she needs during the year, and report very little actual income on her taxes.

Such buyers are very hard to get past co-op boards, partly because they *think* they should be good co-op candidates (there's a recent Streeteasy example of an indignant potential buyer who got turned down on the East Side).

Still, it's possible. I've done two deals like this, one downtown and one on the UWS. Both cases involved gigantic board packages with a lot of extras not requested in the application, as well as substantial politicking.

ali r.
DG Neary Realty

" I've never seen an all-cash buyer with NO income. Such a buyer COULD have very minimal income -- for example, an artist who lives off family trusts which are invested for principal protection may simply draw down what she needs during the year, and report very little actual income on her taxes."

Sexist. Why would you assume the artist is female??

Does the board use an average income over a certain amount of years or the most recent year? So if you just got a raise lets say from $200k to $250k would the board then use the $250k to calculate the D/I ratio with for the mortg/maint or $225k as an average?

We go by your track record.

Your raise -- unless it's a salaried position with an employer you've been with for a while (at least five years) will not be given much weight.

I think the co-op board is only one of your problems. I would be hard pressed to think of a lender that would give you a mortgage at 43% debt:income with your situation. My understanding is that if you are an otherwise good borrower (sufficient w-2 income; good credit score; 20% down payment or more) you MIGHT be able to get a bank to go to 45% debt:income. However, with being self-employed, I would imagine banks would want lower DTI ratios. I'm not a mortgage broker just a guess on my part. Having gone through the mortgage process recently, I can tell you banks are very difficult with respect to documentation. Also, are you counting monthly maintaince in your 43% DTI ratio?

We go by your track record.

Your raise -- unless it's a salaried position with an employer you've been with for a while (at least five years) will not be given much weight.

If the answer to the above is yes to both- salaried position and employed with them more than 5 years than do you use the $250K as the salary?

" I've never seen an all-cash buyer with NO income

A lot of people are getting layed off with substancial Bank

Front Porch-I could come in with more down, but at these mortgage rates I want to take advantage of them. I have significantly more than 3 years of reserve. In fact, I could buy for cash.

NYC Matt-there is no need to be rude-I asked a simple question. I have seen some of your other comments on other threads and you seemed to indicate that one's occupation was a factor. My occupation is indeed widely considered as "recession proof" and I can consistently demonstrate the number of clients of I have served over an extended period of time. During this "recession" my business is up over 25%-during better economies, I have less clients and the assets simply bring more-so it evens out. I also am not a "renter" at present.

Et al-I have been looking at Sponsor apts, but is slim pickings.

Lad-so, you mean that my savings could offest any concerns about my DTI???

Downtown-I already have been approved at 50% DTI-I sell real estate at auction and know dozens of mtg brokers. Chase, for example, will go to 50%(if necessary) if you have 800+ FICO, 6 years of MTG/MAINT, no recurring debt, and 3 years tax returns. All of which I have, and then some. My only issue is that my returns show 43%+/- because of write offs and such.

So, NYC Matt-do you think a guarantor would help??? If so, if it were someone that is retired, what sort of number are we looking at in liquid savings to cover lets say $1500/month MTG/Maint???

p.s. I am new here, so it takes a while for me to respond and get "reviewed" by the "Street Easy board":)

Matt, because I'm female, of course.

ali

"A lot of people are getting layed off with substancial Bank"

Then now is not the time for them to buy.

Duh.

"If the answer to the above is yes to both- salaried position and employed with them more than 5 years than do you use the $250K as the salary?"

No, we'll use the lower salary.

Avoid NYCMatt's board and you can probably find a place.

But I have been told it is So much better to buy than rent why wouldn't it be good to buy?

"No, we'll use the lower salary."

Huh? So why did you mention the conditions if you ignore them anyway?

Huh? So why did you mention the conditions if you ignore them anyway?

Because as it has been pointed out time and time again, Matt is a wanna be snob. He prides himself on lording over the most exclusive trailer in the trailer park, regularly rejecting prospective buyers who are better off financially than he is. (but we like him anyway because at least he's consistent)

>He prides himself on lording over the most exclusive trailer in the trailer park

I like that analogy

Ahhh, well that would explain Matt's proclivity for linoleum.

and formica!

Ooops, that's what I meant.

If you have been approved for a mortgage, make sure you read the list of conditions. I had what should have been an easy mortgage (high income, DTI of less than 20%, 800+ credit score) and the bank still had a long list of conditions after they approved me. I've heard some banks are worse than others for this.

Anyway, I'm not one to advocate use of a broker when not needed, but this seems like the exact situation a broker could help. A good broker (and find a good one, who knows lower priced coops on the UES) will know which boards are likely to be receptive to you. If you have been approved for a loan and have a good credit score (and otherwise good financials) I'm sure there are plenty of coops that would be happy to have you. The hard part is finding the right ones without wasting time with coops who will never even consider you. You don't want to spend weeks/months looking for the perfect apartment and preparing a board package when you never had a chance with a particular board.

when you guys say debt/income of 45%, that is debt service/total income correct? So what % would be acceptable for coops, is it 25% or less?

Regardless of cash reserves, 43% DTI will not pass any board, let alone get to the interview process. Go condo or keep renting.

"when you guys say debt/income of 45%, that is debt service/total income correct? So what % would be acceptable for coops, is it 25% or less?"

Yes.

28% on the high end.