I believe that many friends who hold H-1B visas are struggling with a question: After working in the United States for a few years, and have begun to consider or have already started to apply for a green card, is it appropriate to rent a house or buy a house early? After calculating an economic account, I looked at the bank deposits, and then consulted with the real estate agent around me, most singles and young couples without children will think that it is appropriate to buy an apartment at a low price with a loan instead of paying rent.
Loan interest rates hit a record low, the impact of the epidemic, and China’s foreign exchange controls have caused home buyers in the United States, especially in New York, to swarm to buy one-family and multi-family houses. Bidding war has even appeared in many suburban houses, which are in great demand. To be exaggerated. However, for young people who are shy in their pockets, if they want to borrow money to buy a condo in Manhattan, whether it is down payment or repayment, it is a lot of pressure. So many young people began to consider Co-op.
What is Co-op?
If you want to understand what a Co-op is, the most intuitive way is to compare it with Condo. Condo bought the land + the permanent right to use the house. The Co-op actually bought shares in a company, and the residents had a share certificate. The head of the household has the permanent right to use the house and will not expire; but he does not own the right to the land under his feet. However, the biggest advantage of Co-op is that it is cheap. The average price per square foot of a general Co-op is about 50% lower than that of a condo in the same area. The price concessions will inevitably bring some drawbacks and restrictions. I hope you can accumulate enough information and make sufficient preparations before you buy.
Five pits you can fall into when buying Co-op with H-1B visa
1. Insufficient financial plan, thinking that everything will be fine if you save enough down payment
Although there is no green card requirement to buy a Co-op, the income requirements for applicants are relatively high during the loan process and the Co-op Board application process. Loan banks and boards generally review the applicant’s personal tax bills for the last 2 years to determine whether the applicant has sufficient financial capacity to repay the loan & pay monthly building maintenance costs. For H1B applicants, there is generally no fixed income during the school period. Generally, they have to wait for more than two years of work and have two consecutive years of income records before they can successfully apply for the loan.
It should be noted that some Co-op Boards review the applicant's personal financial status more stringently than the lending bank. Not only is it required to provide personal tax forms and bank statements for the most recent two years, but it also requires the buyer's DTI (DTI: Debt To Income Ratio, refers to the ratio of debt to income.) to be less than 50%. Some even require less than 30%.
(Basic cost of living + mortgage + maintenance fee) divided by monthly gross income <50%
In other words: Although in the process of bank loan application, generally only the applicant is required to pay a 20% down payment, the board requirement may be much higher. Therefore, children who want to buy a house should do their best to make financial planning in advance. To the extent possible, you can choose to pay more down payment to ensure compliance with Board's requirements for DTI.
Also note: if the applicant's residency documents in the United States are about to expire, it may affect bank loans and board applications.
2. Blindly save money without hiring professional lawyers
It is best to hire professional real estate lawyers, not immigration and accidental injury lawyers. In particular, ask a lawyer to check the financial status of the building. The management fees of some Co-ops with poor financial status have increased year by year, and various assessment fees (adjustment fees) are often charged.
The buyer's lawyer is obligated to help investors conduct financial investigations in two aspects:
* Financial statements: to see whether the financial status of the building itself is healthy
* Lien search: A small property rights survey to see if there is any money owed to the government, bank, management company or other departments in the unit to be purchased. If you owe money, you need the seller to make up all the arrears before you can transfer the account.
The ratio of assets to liabilities of the building should not exceed 1:1; the cash reserve can maintain at least 2-3 months of the building’s expenses; the various operating expenses should not fluctuate, and it is best to be basically stable.
3. Underestimated the difficulty of applying
The process of preparing Co-op application materials is as cumbersome and complicated as applying to schools in the United States. But in order to buy a cost-effective house, it is worth the one-time toss.
Buyers need to submit application materials to the management company and Board in accordance with the requirements of the management company. After the submission, if the management company and Board believe that the materials are basically satisfactory, they will further arrange an interview with the applicant. For some Co-op interview opportunities, you will have to wait 2 months.
In the submitted application materials, it is recommended that children add a Cover letter (personal statement) stating that they are responsible, caring, and respectful of others. At the same time, the English expression of the application materials must be accurate and clear. It is recommended to ask a friend who is a native English speaker to help revise the essay, and avoid spelling or grammatical errors. Observe the time during the interview and not be late. The language is natural and fluent in communication, and the clothes should be relaxed and decent.
4. Not fully understand what the board does
A Co-op building is just like a listed company: all the residents of the building collectively vote to elect a board, that is, the board of directors, to run the company on behalf of all shareholders, and they will also receive the corresponding salary. Co-op building resolution events are voted by members of the board of directors, and ordinary households have no right to vote. Major events such as: which property company to hire, controlling expenses, deciding which applicants to join the community, how to invest, and issuing financial statements to the owner of the apartment every year. Although ordinary Co-op residents do not have direct voting rights on these projects, they can vote on the appointment and removal of board members. The number of members of the board of directors is generally a base number, for example: 5 and 7 to facilitate voting. When there are vacancies on the board of directors, residents have the right to apply to join the board of directors.
5. Randomly find a decoration company to decorate
When choosing a decoration company, you must be as careful as possible, you need to find a team with sufficient experience, and you must not let it go during the decoration period, but also give enough attention and carry out project supervision at any time. In addition, for the renovation of Co-op, be sure to report to the management company in advance to elaborate on the project to be renovated and remodeled: kitchen or bathroom? Do I need to change electricity to water? Management company’s requirements for decoration insurance, etc. Be cautious. Once the decorator accidentally breaks the glass door of the building, the fine will be paid by the homeowner.
Generally, Co-op also has strict regulations on the time allowed to start work. For example: Monday to Friday between 9 am and 5 am. The residents must tell the decoration company to strictly observe the time, so as not to be fined by other residents complaining. In particular, many decoration workers have limited English proficiency and cannot communicate with the building administrators who speak English only. Residents must be psychologically prepared before starting work.
After reading the above five Co-op home buying Tips, many small partners may feel that buying a house is too troublesome, and it takes too much time and experience. The cost of buying an apartment is too high, and I didn't have much savings when I started working. And after all, buying real estate is regarded as a heavy asset, and the management cost is also high.
