Index of NYC Real Estate Terms

Bank loan that has an interest rate that can change. The change in interest occurs at pre-determined times and is based on an index. This means that your monthly payments may go up or down.

Bank loan that has an interest rate that can change. The change in interest occurs at pre-determined times and is based on an index. This means that your monthly payments may go up or down.

Condo owners pay this fee every month for the shared amenities and services they receive. Examples of what may be covered through common charges: management fees, utilities in common spaces and possibly snow removal, the in-building gym, etc. Property taxes are not included in this fee.

A residential apartment building that has individually deeded apartments and whose residents jointly own and therefore split the cost of maintaining the common and shared areas of the property. Condo owners are home owners.

The legal sales agreement between the buyer and seller. This document details the agreed upon terms of purchase or transfer for the property that is changing hands.

‘Co-op’ is short for ‘cooperative.’ Co-op buyers purchase shares in a cooperative i.e. the entity that owns the entirety of the apartment building. This co-op purchase gives you exclusive use of an apartment within the building. Co-ops differ from condos in that buyers do not receive a deed for their apartment; they do not own their apartment.

 

Elected residents of a co-op building who are responsible for reviewing buyer applications, maintaining the budget, setting rules for the building, approving renovations, and addressing any other issues that may arise related to the building.

Your personal credit score indicates your creditworthiness or how likely you are to pay your bills on time. Credit scores range from 300 to 850; the higher the score, the stronger your creditworthiness. This score is based on a variety of factors and you may view your score for free online, or your credit card company may provide you with free access to it.

You will see your DTI listed as a percentage (%). DTI is a formula that examines the amount of your debt in comparison to your overall income. Banks use your DTI, along with your credit score, to decide whether or not they should offer you a loan.

You will see your DTI listed as a percentage (%). DTI is a formula that examines the amount of your debt in comparison to your overall income. Banks use your DTI, along with your credit score, to decide whether or not they should offer you a loan.

Earnest money deposits are common practice in other parts of the county, but are nonbinding and rarely used in NYC. An earnest money deposit is a deposit that a buyer puts down to show that they fully intend on purchasing a property. An EMD is held in escrow i.e. it is held by another party until the purchase is made and it can be used as a credit towards the cost or closing fees. If the buyer has a change in heart and decides not to purchase the property, the EMD is often non-refundable.

Money, often a deposit or down payment, that a buyer gives to a neutral third party to hold until closing. The money is paid to the actual seller after closing. The neutral third party may be an attorney or title company. You may hear the phrase ‘held in escrow’ as well.

A meets-the-eye inspection held a few days prior to closing in which the buyer walks through the property to make sure that it is in the condition that was agreed upon in the contract. This is not done by a building inspector, but is an opportunity for the buyer to make sure any stipulations were met i.e. renovations and to check that everyday features (electrical outlets, the stove, window latches, faucets, etc.) are in working order.

As opposed to an adjustable rate mortgage, a bank loan that has a fixed interest rate for the entire life of the loan.

A property is ‘in contract’ when a buyer has made an offer that the seller accepts, has paid the deposit, and both parties have signed the offer. At this point, the listing is no longer available.

A designation that the city of New York bestows upon buildings to protect their “architectural, historical, and cultural heritage.” A special committee must approve changes to the building that involve renovations, exterior features (fences, sidewalks, etc.), and painting. More information on landmark designation can be found at: https://www1.nyc.gov/nyc-resources/service/1953/landmark-buildings

After a buyer applies for a mortgage, the bank replies to the buyer with a three page document or loan estimate that details the terms of the mortgage being offered.

LTV is used to by the mortgage company to assess risk. It is a formula that compares the mortgage amount to the appraised value of the property. Buyers should aim to have an LTV ratio under 75%. You can calculate your LTV ratio by following this formula:

Mortgage amount ¸Appraised Value = LTV ratio %

Ex. Mortgage amount: $625,000 (Sale price, minus any down payments = mortgage or what you’re borrowing)

Appraised Value: $850,000

$625,000 ¸$850,000 = 0.74, therefore the LTV ratio is 74%.

A broker can help you understand this concept more.

A loan used to purchase a property that is granted by a bank or lender. A monthly mortgage payment is comprised of principal (the original loan amount), interest (the money you’re paying to have the loan), and any taxes, fees, or insurance.

A monthly fee that co-op owners pay. This fee is based on the number of shares ownedin the co-op and covers building expenses, taxes, insurance, etc. *Notably different from condo common charges, as taxes are covered in the maintenance fee.

A written notice from a lender that states the amount of money that you are qualified to borrow, as per their guidelines. The lender offers this preapproval after looking into your financial and credit histories.

Insurance that is often required for conventional home loans. It is arranged by the lender through a private insurance company; the monthly premium is often rolled into the monthly mortgage payment. Borrowers whose down payment is less than 20% are often required to purchase PMI.

A borrower can have their interest rate locked between the time of the offer and closing. This remains in place over a set period of time—30, 45, 60 days, etc. Changes in the mortgage application and a slow closing process can impact the rate lock. There are variables and costs to consider. For more in-depth information on rate lock visit this page from the government’s Consumer Financial Protection Bureau.

https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/

In condo buildings, the by-laws usually state that the condo board has a set period of time to exercise their right to purchase a unit that is under contract for the same price that it is under contract for. This right of first refusal is not often utilized, but it can be if the board feels, for instance, that the unit is being sold well below market value. In most instances, the board will waive their right of first refusal and the sale will proceed.