The Purchase Application – What to Expect
Now that you’re in contract on your dream home, and things are moving along with the mortgage process (if you’re financing), it’s now time to turn your attention to the purchase application. Let’s take a look at what you can expect.
What’s the purpose of the application?
It provides the co-op board or condo board with personal and financial information about you, the prospective purchaser. Co-ops will use the information to determine whether or not they wish to interview you and subsequently approve your purchase.
Now you may be asking “Why does a condo need this same kind information?” Condos still have the power to request information about you before issuing the waiver of their right of first refusal.
What are the components of the application?
The components of the application will vary from building to building, but normally it includes the following:
- Purchaser Information Section
- Requests information such as name, current address, employment history, income information, contact information for references, etc
- Credit Check/Background Check Form
- Copy of the Fully Executed Contract
- Financial Statement
- This is a statement of all your assets and liabilities. Every item on the statement (except personal property, with some exceptions) must be documented – if you can’t back it up with documentation, don’t put it on there.
- Personal and Business Reference Letters
- These letters give the board an opportunity to learn more about you personally. Feel free to ask your friends and associates to write wonderful things about you but be sure they answer all of the following:
- How long have they known you?
- In what capacity did you meet (i.e., Jim is an old college chum, a former neighbor, we served on a committee together, etc.)?
- Why do they think you will make a great neighbor?
- Additionally, if they live in a co-op or have served on the board at their building, this is a good thing for them to mention in their letter.
- Tax Returns
- Landlord Reference Letter (if you’re currently a renter)
- Bank Reference Letters
After reading this, you might be saying to yourself, “This is a LOT of stuff! How long do I have to prepare it all???” Your contract will determine how long you have to prepare the purchase application, but most require buyers to submit the application within 30 days of a fully executed contract or within 3 to 5 business days of receiving a commitment letter, if financing is being obtained.
The process can seem a bit daunting, but a good agent will be there to help you put it all together to present the best picture possible of you to the co-op or condo board.
Have more questions about buying in a co-op or condo? Feel free to reach out to me. I’m always happy to help!