Buying a Home With a Friend? Here’s What You Need to Know.
Friends and unmarried couples buying homes is on the rise - and this growing buyers segment shows no signs of slowing. If that sounds like you, I want you to stop, think, and ask a few questions before you make that leap.
What does it mean legally?
As people marry later in life and house prices rise, many markets see more and more friends purchasing a home together to get a foot in the homeownership door. While it’s an excellent opportunity to save money and build equity, be aware of the legal complications.
The process of buying a home with friends is similar to purchasing with a partner or on your own, but there’s specific aspects of this type of sale on which you should seek legal advice. How will the down payment be split? In whose name will the mortgage be? How will the title be held? These are all questions that could have a significant impact if you and your partner (or friend) split. Make sure to consult your lawyer or mortgage broker for counsel.
And remember, get everything in writing!
Who’s responsible for the upkeep, maintenance, and repairs?
I get it. Buying a home is a thrilling, exciting time in your life. But don’t forget about what happens after you become a homeowner. Who will be responsible for mowing the lawn? How about fixing a broken facet or upkeep? If the roof needs replacing, who’s accountable for that? If you’re diving into homeownership with a friend or as an unmarried couple, these are critical questions that you should be asking yourself.
And don’t forget to allocate space! Make sure you both have clear expectations when it comes to who gets what. Does someone need a home office? Were you hoping to park your car in the garage while your home buying partner hoped to use it as a workshop? These questions are essential if you’re buying a home with a friend rather than a romantic partner!
Is this really something you want to do?
Above all, you have to decide if this is the right situation for you! While you may be ready for homeownership, your friend or partner may not be the best co-owner, or you may not like co-owning a home in general.
And keep in mind that there are both pros and cons to buying a home with friends. Pros include having more purchasing power, two credit scores that could be mightier than one, having a chance to build better equity, and more. Cons include harming your relationship, trouble exiting co-ownership, and possible damage to your credit score, among others.
Make sure to consider all of the factors before you move forward.
Thinking about purchasing a home? Send me an email at guro.midtsund@exprealty.com!
Guro Midtsund is a Realtor with eXp Realty, LLC in Birmingham, AL. This information is deemed reliable but not guaranteed.