Sarah is purchasing a co-op apartment in Manhattan for $800,000. Her lender explains that co-op financing differs from condominium financing in New York. What type of loan will Sarah most likely receive for her co-op purchase?
Correct Answer
B) A share loan secured by the cooperative shares and proprietary lease
In New York, co-op purchases involve buying shares in a corporation plus a proprietary lease, which is personal property, not real property. Lenders provide share loans (also called co-op loans) secured by the shares and proprietary lease, not traditional mortgages secured by real property deeds.
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Related Topics & Key Terms
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Related Concepts
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
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