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Co-ops can provide a less-expensive option to home buying than a condo, but this alternative to traditional home ownership has its own complexities. Find out what a co-op is, what is required to get into one, and why a mortgage loan isn’t an option for buying a co-op.
Co-op is an abbreviation of the term “housing cooperative” Co-ops are buildings owned by a corporation. The corporation is made up of owners within the co-op. The corporation owns the entire building, including the interior and exterior of each unit, and all common areas.
In a traditional real estate transaction, you buy property. This can be a house and the land it sits on, or a condominium which is space in a building al;though you don’t own the land or exterior. With a co-op, you buy shares in the corporation controlling the co-op. This makes you eligible to live in the co-op.
A co-op (aka a housing cooperative) is a type of housing owned by a corporation made up of the owners within the co-op. The corporation owns the interior, exterior, and all common areas of the building. Instead of buying property as you would in a traditional real estate transaction, you’re buying a share of the corporation that controls the co-op, which entitles you to living space.
Think of it as buying shares in a project, with the building being the project. You get to live in the building, and split costs for maintenance and services with the other shareholder/tenants. The co-op association manages membership fees to cover these items as well as any additional amenities and the property taxes. As a co-op member, you can vote on rules and management of the building, and run to sit on the board.
There may be a mortgage on the whole co-op, but it is held by the corporation. There isn’t a home loan that covers buying into a co-op, because you’re not buying property, you’re buying shares in the corporation. Whether or not you’re approved to join the co-p is up to the current co-op board.
Since you can’t get a mortgage loan for a co-op, you’ll have to come up with another way to get the money together. This could mean savings, a personal loan, a specialized co-op loan, or a gift from a friend or family member.
If you don’t have the cash to buy shares in a Co-Op, a condominium gives a similar experience of living and can qualify for a mortgage loan. A townhome/townhouse is another option. Talk to your Loan Officer about the different types of mortgage loans you can apply for to achieve your dream of homeownership with minimum hassle.
We’ve fine-tuned the preapproval process to make it one of the easiest experiences you’ll have in the whole home buying process. Buying a home should be fun and exciting, not stressful. Get preapproved today!
Sammamish Mortgage has been in business since 1992, and has assisted many home buyers in the Pacific Northwest. If you are looking for mortgage financing in Washington State, we can help. Sammamish Mortgage offers mortgage programs in Colorado, Idaho, Oregon and Washington.
Contact us if you have any mortgage-related questions or concerns. If you are ready to move forward, you can view rates, obtain a customized instant rate quote, or apply instantly directly from our website.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.