I'm a VP of my co-op Board on Palmer Ave. in New Rochelle. Not sure if you are applying to a co-op here. To answer your question, you need to understand the following: Co-op Boards do not want to admit a buyer then at some point in the future, that buyer cannot afford to pay their monthly maintenance fee for whatever reason. It's the same principle as not paying your rent. Therefore, a co-op Board will want proof that your income is sufficient to pay your monthly mortgage + the monthly maintenance + any debts (student loans, credit cards) + ConEd + any commuting costs (MetroNorth or gas for your car) + money left for food, etc.
Example: Let's say you're buying a 2 bedroom co-op for $300,000.
Monthly income ------------------------$5,000.
Monthly mortgage - ?
Monthly maintenance - $1,500.
Monthly MetroNorth - $268./month
ConEd - $100,
Student Loans - ?
Credit Cards - ?
How much money is left after paying the above expenses? Does this buyer have any money left to buy food, cable, cell phone, clothes? Is there any money in savings if this buyer lost their job and was unemployed? If unemployed, can this buyer pay the monthly mortgage + the maintenance fee?
When you fill out the co-op Board application, you need to prove that if you were unemployed or had a medical crisis, you will have money in savings to pay the monthly maintenance fee. You need to know that if you fail to pay the maintenance fee, the Board can take legal action against you and start eviction proceedings. No co-op Board wants to do this because it costs money for attorneys and why should the other residents have to pay attorney fees to kick you out because you failed to pay the maintenance fee on time. The better solution is to prove to the Board that if you suddenly lost your job, you can afford to pay the maintenance fee until you found a new job. Remember, you cannot sell your unit until the maintenance fees are up to date. If there is a balance due, the Board will get paid at closing when you sell.
Another issue that upset me as a Board member was when we had a buyer who "claimed" to be buying the unit for herself BUT she was paying for a 2nd car and paying for her daughter's student loans. Alarm bells went off in our heads that this buyer was planning to move in with her daughter and wanted to keep it a secret. Sorry, but you cannot move in with somebody else and keep it a secret. The co-op Board will find out and we can take legal action against the buyer.
Finally, to help you out with buying a co-op - PLEASE VERIFY THE CO-OP BOARD'S FINANCIALS. Do NOT go to closing without knowing the co-op's financials. VERY IMPORTANT!!! You need to know that any resident can be on the Board. There is no requirement to have accounting experience. This means any idiot can be on the Board and not know what they are doing. As a former realtor, I have been to all the co-op buildings in New Rochelle, Yonkers, Larchmont, Mamaroneck, Mount Vernon, etc. Many co-op buildings have lousy financials and they are short on cash and have frequent maintenance increases because the Board members don't know what they are doing. The ideal method is for a co-op Board to have at least 10% cash reserves for emergency situations. As a guideline, if a co-op Board does not have good financials, the sellers of the co-ops need to sell their units cheap and/or they need cash buyers. Sellers cannot sell at higher prices because of the Board's finances. Lenders will refuse to give loans to buyers if the financials are lousy.
Bottom line - you can buy a co-op in a building with lousy financials. Just know what you're getting into and if you need to sell in the future, know that it will be a bit difficult to sell.
Also as a guideline - co-op buildings with lousy financials will go easy on buyers. They will approve buyers who don't have enough savings and are not as strict. Co-op buildings with strong financials and cash reserves will be stricter with buyers and buyers need to show proof they can pay the maintenance fees.