What is a Co-op?
A housing co-op is when a cooperative group (usually a corporation) owns a piece of real estate and allows individuals to purchase a share of the corporation. Someone living in a co-op does not own the unit they are living in, rather they own shares in the corporation that owns all of the units. These shares grant you access to live in the unit you are purchasing.
What is Required to Buy Into a Co-op and Receive Co-op Financing?
In order to obtain co-op financing, the co-op board must approve you. When applying to the co-op board, there will be credit and financial history checks, employment history verification, character references and several other deciding factors taken into consideration.
Getting Co-op Financing
As well as the co-op board approving you, the co-op building itself must also be approved by the lender. In order to approve the building, the lender has to contact the managing agent of the building in order to access the necessary information. The borrower and realtor can get the managing agent’s information from the seller’s agent or by contacting the building directly. Managing agents typically charge a fee for providing the information needed that can range from $50 to $300.
While we are approving the building, we will also be approving you. This part of the process is the same regardless of whether a co-op mortgage is involved or not.