Can I Use an Adjustable Rate Mortgage When Buying a Co-op in NYC: https://www.hauseit.com/adjustable-rate-mortgage-arm-co-op-nyc/ <br /> <br />Calculate Your Buyer Closing Costs: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/ <br /> <br />Many co-op buildings in NYC have restrictions on using an adjustable rate mortgage. Some co-ops prohibit adjustable rate mortgages altogether, while others allow them subject to certain guidelines. <br /> <br />Co-ops which permit the use of ARMs often require a higher down payment in addition to a stress test of your debt-to-income ratio based on the lifetime interest rate cap of your loan. <br /> <br />If you’re thinking of buying an apartment, you can estimate your buyer closing costs in NYC using Hauseit’s interactive closing cost calculator available at www.hauseit.com. <br /> <br />You can also save money on your purchase by requesting a Hauseit Buyer Closing Credit. <br /> <br />What Is an Adjustable Rate Mortgage? <br /> <br />An adjustable rate mortgage is a loan with an interest rate which periodically adjusts based on a particular index or benchmark. Adjustable rate mortgages, also known as ARMs, are a popular option for buyers since the initial interest rate is typically lower than the fixed rate on a 30-year mortgage. <br /> <br />Most adjustable rate mortgages today are hybrid ARMs with an initial fixed interest rate period. Two popular examples are the 5/1 ARM and the 7/1 ARM, under which the initial interest rate remains fixed for 5 or 7 years respectively before adjusting every year thereafter. <br /> <br />It’s typical for an Adjustable Rate Mortgage to have a cap on how much the interest rate may increase between each period and a cap on the maximum lifetime interest rate increase over the life of the loan. <br /> <br />How Does an ARM Mortgage Affect Your Co-op Debt to Income Ratio? <br /> <br />An ARM is risker for a co-op building. This is because rising rates increase your monthly payment and thereby raise the amount of your income which goes towards housing expenses. In other words, rising rates reduce your debt-to-income ratio. Co-ops do not like this, as a higher debt-to-income ratio increases the risk that you might not be able to afford your co-op monthly maintenance payment. <br /> <br />As a result, many co-op buildings in NYC prohibit the use of adjustable rate mortgages. Those which permit the use of ARMs will often ‘stress test’ your debt-to-income ratio by requiring you to calculate it under the maximum interest rate allowable under the ARM. <br /> <br />This conservative calculation methodology makes it all but impossible for an average income buyer to meet the co-op’s debt-to-income requirements. This co-op essentially prohibits ARMs in all cases except for someone whose income is stratospheric, and if that were the case the buyer would probably be looking at a much larger apartment in a different co-op. <br /> <br />Save Money with a Hauseit Buyer Closing Credit: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/ <br /> <br />#hauseit #hauseitnyc <br />https://www.hauseit.com
