Townhouse Mortgage Financing
Townhouses are single family or multiple family buildings with residential units. It is easier to get financing for a Manhattan townhouse than a New York City co-op or condo. The banks evaluation process is less strenuous for townhouses. No building financial's or questionnaires are required and the appraisal process does not need to involve an agent.
Wise Investment
The buyers must qualify for a loan but lenders look favorably on townhouses as an investment. Townhouses are an excellent investment overall. The tenant's rent will be income and banks will extend credit for 75% of the present rental income. Home owners who buy townhouses as investments will not be disappointed. Their rental income can offset the monthly mortgage payment.
Low Mortgage Rates
Mortgage rates for New York City townhouses are as low as for any residential property. Home buyers can get up to 95% financing without Private Mortgage Insurance (PMI). Since interest only products are available for townhouses, home buyers can get affordable mortgages. If a townhouse has more than four units, however, it will be classified as commercial property. Lending guidelines change at that point. Home buyers would have to put down 25% and the mortgage rates could be higher (approximately .375%). As well, for property evaluation, bank underwriters will emphasize the income more than the buyer's qualifications.
Closing Costs
Closing costs for a Manhattan townhouse will come in at 3-4% of the loan amount. This amount originates mostly from the 1.75% New York State Mortgage Tax – a requirement. People have avoided mortgage tax by having the seller's bank do a mortgage assignment. That process would, however, require the services of an exceptional lawyer and the agreement of the seller's bank.
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