You'll probably need some kind of insurance Jess, for hazard-y stuff.

What's the difference between a co-op and a condo?

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Here, for single family homes, you generally have to buy private mortgage insurance, on the difference between your down payment and 20% of the purchase price.

We have to pay mortgage insurance if the downpayment is less than 25% of the purchase price. The amount you pay is a percentage of the purchase price and depends on how much downpayment you have.

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We have to pay mortgage insurance if the downpayment is less than 25% of the purchase price.

That used to be the general case for condominiums, in Massachusetts (different states can have different regulations on stuff like this), but I'm not sure if it is, any more.

When you finally have 25% equity, can you get out of the mortgage insurance? I know there was a move towards that here, in the last few years, but I didn't follow the stories closely, because it didn't apply to us.

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When you finally have 25% equity, can you get out of the mortgage insurance?

I don't know. I would assume yes.

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You'll probably need some kind of insurance Jess, for hazard-y stuff.

Well, we already have regular apartment insurance (which covers our personal property, and the inside of the apartment) in addition to the building's overall policy.

What's the difference between a co-op and a condo?

With a condo, you're buying airspace -- you legally own the inside walls of the apartment and everything within it. With a co-op, you're buying shares in a corporation that owns a building, and those shares just happen to be exactly enough to lease yourself an apartment in said building. In practice, you end up "owning" an apartment either way, but from the bank's perspective, if you buy into a co-op, you're not buying property, and so you don't get a mortgage. Instead, you get a loan that acts in every practical way exactly like a mortgage, but the bank doesn't call it one, and legally you're not considered a homeowner (even though you still get all the same tax benefits).

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Huh. I always figured they were the same and that one term was just older. Co-ops came first, right?

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I think it's more that condos are more common in some places and co-ops in New York others.

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There's may be other financial reasons, but my understanding is that co-ops are set up to basically let the people who live in a building control who lives there, hence the interview that Jess had to have.

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Usually it's around 20% downpayment that cuts out the PMI (though there are programs that you can use that can cut it out without the large downpayment, usually for lower-income first-time homebuyers). It can add just a little or a lot to a house payment, and can sometimes be a barrier to people who have neither enough for a %20 downpayment or the extra hundered a month for the mortgage payment. OTOH, at least it's a way to get a house without the huge downpayment.

I know nothing of co-ops as we don't have many (any?) of those here.

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Jessica, thanks for explaining that. I've always been curious, but forget to look it up when I'm near a computer.

Here there is a big fuss over ground rent. You own the structure, but pay rent on the lot. It's usually not much but people can lose their homes over past-due rents that are much, much less than the value of the home (like a few thousand.) And the system is antiquated, so records are really sketchy. It's all fascinating.

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