Last year we bought our first home: a co-op in New York. It seemed scary and impossible at the time, but I learned that it is just a (long!) checklist: if you follow the steps, you will walk away with a home.

The incentives are perfectly aligned. You (the buyer) want a home, the seller wants to move, the bank wants your business, and the co-op wants to fill the space. If everyone can just make the numbers work, it's a done deal.

In this first installment, then, we start with the cast.

Incentives

It's helpful to understand everyone's incentives. Again, this is a situation where if we can find numbers that work for everyone then we'll have a deal.

Buyer (This is you.)

Financially, for most New Yorkers, it makes more sense to continue renting than to buy. The S&P 500 has a 10-year annualized return of 11%, which is far greater than property value increases.

But that is okay - we bought because we wanted were tired of landlords and wanted greater stability in our living situation.

You will figure out two things:

• How much of your savings are you willing to put towards a down payment?
• How much can you afford to pay each month for a mortgage?

We'll have calculators for this later.

The Seller

Usually, this is someone who is moving - either to a larger place, outside of the city, etc. They are balancing the desire to have a long bidding process to get a high price against the need for cash (for example, to finance their next home.)

The Bank

Banks are eager to find a way to approve you for a mortgage - this is a major way you make money and your loan officer is a thousand times more helpful and knowledgable than any retail employee you've ever met.

Bankers usually make commission for the loans they sign, and they also know they're competing to get you the best interest rate. It is absolutely normal and expected to comparison shop here - don't be shy about this.

The bank itself wants to make sure you will not default on the loan, so they have minimum income requirements proportional to your loan amount.

The Co-Op Board

Most boards want a few resonable things when looking at applications. They want units to be occupied, since vacant units do not generate maintenance revenue for the building.

It is helpful for sales to go through quickly, because most buildings will take a small fee ("flip tax" or "transfer fee") as a percentage of the sales price. This is a not-insignificant part of a building's fund.

Like banks, they want to make sure residents can afford to pay the maintenance fees. They want to avoid a situation where a resident is living living above their means. If someone defaults on their payments, it is painful, costly, years-long process to evict, which means less money for things like repairs.

Buildings also want to make sure that residents will not be a nusiance to the staff or their neighbors. People choose to live in co-ops because they offer stability, and that includes friendly, stable neighbors.

Attorneys and Realtors

In NYC, both the buyer and seller have their own attorneys representing them, and they usually get a flat fee for a deal. There are also mortgage brokers, who take a fee to help contact different banks and find the best mortgage rate.

Similarly, realtors (or "brokers") represent their respective clients on the buyer and seller side. They make a commission of the sale, usually paid by the seller. Their job is not help you negotiate a lower price on your home, but to make sure that you're correctly following all of the steps - and being the first phone call for your anxieties - to get a deal done.

Next up: Financials

In the next installment, we'll go through how to set your budget and prepare your financials.