Co-purchasing a Property

Co-purchasing a Property

It is a common misconception when hearing the words house “co-purchasing” that it only refers to a married couple purchasing a home, but surprisingly enough that isn’t always the rule. It is very common nowadays for siblings, friends, parents and their children, relatives, and even non-married couples to purchase a home together.

 

The most outstanding aspect of this type of home loan is, that it offers the unlikely opportunity to individuals to share the massive financial burden, that is buying a new home, that otherwise wouldn’t have been possible on their own. But before jumping the gun, sharing this financial weight is a complex decision, it literally means you will be sharing the responsibility of co-owning a home as well as an obligation to each other for a long time.

 

Long-term obligation aside, there are a number of positive aspects in co-purchasing a property and one of the most important ones is that it makes loan qualification much easier, as the lender will take into account two different credit scores and debt to income ratio, basically, the more “income” you bring to off-set the debt, the better it will be to qualify for mortgage financing.

 

There is also the possibility as long as all borrowers inhabit the new home to share other expenses like utility bills, re-furnishing it, remodeling or renovating, etc.

 

There aren’t any rules against who the partners could be, they don’t necessarily have to be related or married. Some of the most common cases are:

  • An adult son or daughter with one or both parents or step-parent.
  • Boyfriend/Girlfriend, fiancé/fiancée, or life partner.
  • Two individuals with no relation, looking to own an investment property.
  • Two married couples buying another home.
  • Two or more family members seeking to purchase a vacationing house or a large property for the whole family.

 

These are only a few of the situations that could be encountered. These and other combinations are permitted with the current lending laws.

 

As far as the qualifying process goes, it’s pretty much the same as a standard home loan with a single borrower. The lenders, whether they are mortgage brokers or bank brokers, use the same guidelines to evaluate all applications for loans. The experts in the field of mortgage loans suggest that legal agreements be redacted in case the ownership % is different between the borrowers.

 

All things considered, co-purchasing a property offers a chance for many people to stop being renters and become homeowners. Just be sure that the person you choose to co-purchase a home with is the right one and that you have all the necessary legal documents necessary that each party is represented fairly in the agreement.

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