Whether you are a first time homeowner or you want to have the best chance of securing a property in this fierce real estate market, co-owning a house might be the best option for you. What is co-ownership and what does it look like?
Co-owning a house is where multiple parties come together to fund the purchase of a property. In real estate this happens every day, usually between couples, but co-ownership is not exclusive to romantic relationships! Co-ownership can be between family members, and recently, an uptick has been seen in close friends purchasing a house together.
Many buyers are keen to enter the real estate market but might not have the capital required for a down payment. Finding someone with whom you have a high level of trust and faith can help you achieve your goals of stepping onto the property ladder and building equity.
Joint Mortgage
When co-owning a house, you will require a formal joint mortgage plan. This means that all parties who wish to purchase a property together will sign their name on the dotted line and share legal and financial responsibility in paying the mortgage.
The one thing you need to consider when entering into a joint mortgage with someone is that your mortgage lender will analyze all applicants’ financial backgrounds. If someone who is looking to co-own a home with you has a questionable debt history or credit score, your interest in the joint mortgage will be negatively affected.
Additional Buyer Resources
- Questions To Ask A Realtor When Buying A Home
- First Time Buying Strategies 2021
- What To Do After Buying A House
The Pros to Co-Owning A Home
As mentioned earlier, it is without a doubt an approachable way for many to step into the real estate market, especially when it is as competitive as it is today. Another great advantage that many overlook is the affordable month-to-month operating costs of sharing a home. You will all split utility costs, property taxes, and any communal purchases for the home. This will help you save more as well as build equity.
For more information on specific closing costs when buying read this related post.
Things To Consider When Co-Owning
A mortgage is very different from a tenancy. Many friends chose to share an apartment together, and at one point life may take one or more of the friends down a different path. It is easy to break out of a rental agreement as after a year it goes month-to-month. A joint mortgage, especially a fixed-rate mortgage can offer lower interest rates, but last for several years. While it is possible to break out of a mortgage agreement, often the financial penalties of breaking a fixed-rate mortgage is high.
Co-owning a house can be the right decision for you and your financial future! All it takes is some planning and mutual agreement. Would you like to learn more? Please reach out to me here. I would love to help you and your co-owner(s) the home of your dreams.
