Buying a Home with a Friend
If you’re single and you want to buy a home, but your income isn’t enough to purchase what you want, you could consider a buying partner. Especially in large, more expensive cities, there’s a growing trend these days for friends to team up and purchase property together.
Buying More for Less
Drawing on two incomes, friends can buy a larger home with more amenities, while cutting their expenses for maintenance, repairs and improvements in half. To obtain financing, of course, both parties to the transaction must qualify for the loan. Make sure to read our previous post on New Regulations from Fannie Mae that Can Delay Closings for Home Buyers. The credit market has tightened up and you and your partner will need to be united in your approach to buying a home.
Precautions You Should Take
The biggest concern is what happens if one person decides to get married, moves out of the area, loses employment or simply stops making his or her share of the payments. Such questions should be answered long before they come up with legal arrangements that spell out specifics covering a myriad of possible situations. Not only should the transfer of property ownership be considered, you should have an agreement on the disposition of furnishings. Discuss what you’ll do with decor, repairs and remodeling costs. Decide in advance how any disagreements will be handled.
In most cases, unrelated homeowners will want to hold the title as “tenants in common.” That way if one person dies, the decedent’s share of the property will go to his or her heirs (rather than to the buying partner). They should also consider buying the property as two individuals rather than by creating a partnership (which might require higher interest rates and fees on a loan). Most importantly, consult an attorney before entering into the final agreement.
Give us a call at 636-532-4200 to discuss your situation, or if you would like to be referred to a local, trusted lender. Who really knows when the economy will improve? However, this approach could be your way out of throwing money away on rent and start building equity … even if it is shared!
Half of something … is better than half of nothing!
- Should you risk buying a house with friends? (confused.com)
- Home Sharing
- First-time homebuyers lean on bank of mom and dad (business.financialpost.com)