buying Studio in Manhattan - First time buyer - Help!

Wangta01 · Joined: 18 Jul 2006 Posts: 2

Hi guys,

Been reading this board for a couple days now and have found much of the information very helpful. I just checked out a couple studio apartments last weekend in Manhattan and am nerveously trying to move forward with a transaction. I'm however VERY new to this and feel like i'm walking very blindly into this and am expecting at any moment to get hit with some huge fee that I did not know about or consider. Heres what I've done so far.

1. Checked out various apartments with a broker (whom I found on a website). The broker seems very helpful and does seem to be working in my best interest. They are not representing the building - so there are essentially two brokers involved i believe: one for the building and the one working for me. I think other brokers are also showing the apartment, but they have to go through the seller's broker to arrange tours, etc.

2. Pre-qualified for a mortgage. Spoke to 3 mortage brokers and all three told me that I would qualify for the amount that I was looking to spend.

3. I'm about to go and sign the transmittal form to take the apt off the market for 7 business days. I understand that I can withdraw from this at any time with a full refund ($150).

Can someone review and let me know if I missed anything or if there are pitfalls that I should be wary of? I have no idea what closing costs are expected to be, but is it safe to assume 5%? Also, will I have to pay the broker fee for the buy side/sell side brokers or is that imbedded in the price/closing costs?

Any help would be greatly appreciated! This is an extremely strenuous and stressful process!!!!!

Greg Phillips · Joined: 13 Dec 2005 Posts: 123 Location: Chillicothe, Ohio

Ask each lender for a good faith estimate based on the unit you are interested in and the asking price.

This will show the rate, monthly payment, and fees for doing the loan.

chow · Posted: Wed Jul 19, 2006 10:14 am Post subject:

Take all of the information from the apartment, and all of your income documents to the most professional of the three brokers, and get your loan going. Ask them if they are doing an automated underwriten loan, and have they got the "findings" or conditions for the loan terms, while you are there. See if they can have that when you meet. As long as you have given them correct information, maybe faxed a few doc's over, they shoould be able to give you a solid warm and fuzzy feeling. This way everyone knows you can afford it, and the seller, sellers relitter (broker) will rest easy too.

Wangta01 · Joined: 18 Jul 2006 Posts: 2

Thanks for the advice Greg_Home123 and Chow! I feel much better about this knowing that you guys and the rest of the people on the forum are here to help.

Chow, sorry if this is a stupid/newb question, but what is an "automated underwritten loan"? Is there an advantange to this type of loan? What other types are there?

Another random question: my parents are giving me some money to help with the downpayment, but wanted to know if there was any way to insure the amount they are contributing, in case something happens to me (hit by a bus, terrorist bomb, etc.). So, if if something bad were to happen to me, my parents would get their full amount back. Seemed like a kind of outlandish request at first, after some thought, I can understand their concern, considering I will live in NY - one of the biggest targets in world. Does anybody know how I would go about this and if this is a usual part of this process?

Thanks so much!

chow · Posted: Thu Jul 20, 2006 1:35 am Post subject:

They can gift you money for down payment. How would they get it back?
weeeeeeell, If the loan doesn't close-because you got killed, the contract would be kind of dead, and the money would be in your bank account.

You don't take that money to the closing until you close. If they gave you deposit money/earnest money, then it would depend on your purchase agreement-It's kind of hard to force a dead person to buy a home. Your estate could sue the seller for not returning the funds.

Now for the "Easy" answer. Most Real estate loans are "preapproved" through an automated underwriting system. Fannie has one, Freddie has one, Ginnie has one-almost every wall street investment company has one. We enter in all of your information to the "Gods who have the Gold" automated system-and they run your credit, ask us to verify your funds, and net worth, then the Golden God's approval system spits out terms, conditions.

You have to actually prove whatever information we put in there for information, for the firm committment, along with the standard title search, and the other 80+ papers we sign, document, cross check, and stamp.

I was just mentioning the very first step. You would be suprised at how many people tell you that you can have a loan-a certain type of loan, then the building won't qualify with the lender. For example-HUD won't touch a building where the Homeowners association can turn you down just because you don't pass the interview with the association. :wink:

You will need to provide the "by laws" of the homeowner's association, and that has to be approved by the lender. It's a Fair Housing issue.