2021 is going to be a challenging year for real estate buyers, especially with the ongoing covid situation affecting the markets. How should newcomers prepare?
2021 might be a challenging year for you if you've decided to put your renting days behind you and get your own place. If you have been saving diligently for the last few years and are ready to become a first-time homeowner in New York state, this article is for you. But it isn't easy; you can use all the help and advice you can get. Here are a few tips you can follow to prepare yourself for your first NYC real estate purchase.
Have Money Saved Up
Buying an apartment in the state of New York for the first time does not come cheap, owing to the fact that NYC is one of the most expensive cities in the US. The sales tax for buying a co-op or a condo is very high, and the downpayment is generally 20%. This is why it is absolutely crucial for you to start saving as early as possible.
You need to be aware that it is very unlikely that you can get away with a small down payment. Most co-ops in NYC will allow a maximum of 80% financing, meaning at least a 20% down. But there are a few co-ops that require at least a 30% down payment. Hence it is imperative that you save money, no matter what type of property you are aiming to purchase.
Beware of Extra Costs
A down payment is not the only money you need to come up with initially. There will be closing costs, which can be pretty significant in New York. You will be looking to pay anywhere from one to two percent of the purchase price for the co-ops to two to four percent when it comes to condos. And if the condos are new construction, the closing costs might actually be higher.
Pre-Approval Is a Plus
When searching for the perfect place, you may be enticed by some of the beautiful properties online. But what you think you can spend and what you actually can spend monthly might be very different. This is why you need to get in touch with a mortgage broker or a lender who will verify your income, go through your credit score, and check all other financial documents regarding your assets, income, and liabilities. After that, they will issue a pre-approval letter that will help you to understand exactly how much you can spend. A pre-approval letter is also required when you make an offer on your desired property.
Increase Your Search
One of the mistakes first-time buyers make is that they start a very narrow search, only to be forced to expand it later. The best thing to do is to cast a wide net from the get-go by keeping an open mind. You need to look into several neighborhoods for comparison, taking into account budget, commute, and location. Having a wide search parameter with lots of options means you are more likely to find the perfect match for you.
Look Out For The Competition
New York is a very competitive market, largely due to the fact that there are over 8 million people who all want to live here. The buyer's market may be slow, but that doesn't mean that a well-priced co-op or condo that fits your budget will be available for long. Then there are all-cash buyers, who will steal opportunities away from you. So be alert and wary of the competition and act fast when the moment comes to make your offer.
Take Advice from Home Inspectors
When you are making one of the biggest decisions of your life, it really pays to have advice from professional home inspectors. They will guide you through the purchase and ensure that you understand the maintenance needs that the house has so that you don't run into problems after your purchase. They will arm you with the information you need to negotiate and ultimately decide if you want to go ahead with the deal. Home inspectors will usually provide you with photos and illustrations so that you have a clear picture of the state of the building.
Use Commission Rebate to Get Cash Back
Your real estate broker can arrange for you to get cashback. While buying a condo, co-op, or townhouse, you will be able to save on the commission rebate. Some real estate companies make it possible for you to receive a commission rebate of up to 2 percent on the price of purchase. Hence, if you are spending $1,500,00 to buy an apartment, you can receive a commission rebate of up to $30,000.
You can use this money to furnish the house or offset the closing costs, or just simply replenish your savings. It will really be worthwhile to engage the services of a real estate broker.
Purchasing real estate in New York can be pretty overwhelming, especially for first-time buyers. But doing proper research and getting yourself prepared for the process with the help of real estate brokers and home inspectors will give you the upper hand in the game. So choose well and reap the benefits of buying your dream property within your budget.
