If you’re buying a condominium in New York City, you are probably going to apply for a mortgage to borrow the money in order to buy the apartment.
A mortgage involves giving an interest in property (here, your condo) as security for the lender giving you the loan.
It is the most common method of financing real estate transactions.
The condo buyer who gets a mortgage is also known as the ‘mortgagor,’ the party who transfers the property interest to the lender.
The bank or financial company lending you money to buy the condo is called the ‘mortgagee.’
To qualify for a mortgage, a variety of different factors are taken into account. Your financial history and whether you can be deemed a good credit risk by the lender
will help determine if you can get a mortgage. This will likely include information about your:
- Credit record and history;
- Savings and current financial health;
- Annual income, and sources of income;
- Current job and employment history;
- Whether any creditors have any legal judgments or liens against you; and your
- History of home ownership
Different Types of Mortgages
To ensure that you keep your promise to repay the lender the borrowed money, with interest, the lender takes what’s known as a “security interest” the property. If you fail to keep your end of the bargain by defaulting on your mortgage payments, the lender can start foreclosure proceedings to hold you in default of your repayment obligations. This accelerates any long-term repayment obligations spelled out in your mortgage, and will add even more fees to the cost of your original loan (e.g., legal fees related to the foreclosure, auction costs).
Unless you are able to work out a new set of repayment obligations with your lender, a court can order that your condo be auction off to the highest bidder.
Any money raised from the foreclosure sale will be used to first pay your lender back the money it loaned you, with interest, legal fees, and other court-ordered costs.
If there is any money leftover after the foreclosure auction, it should wind up in your hands.
However, you’ll probably already have been evicted from the condo by the new owners by that time.