Buying a home with friend is the great way for saving and overwhelming as well. On the flip side, it is equally troublesome due to the differences or one of you moves out. Here are the pros and cons you must know before buying a property with your friend.
Sharing a home or pooling a car with a friend saves you money while letting you enjoy the other person’s company. Same thing you can do while buying a home when you don’t have sufficient funds or tired of paying rent. Buying a home with friend is good strategy if you are single and not having marriage plans for next 5-7 years. That’s why it is quite popular among “unattached singles” sharing their assets to be qualified for the down payment and financing requirements to buy a home.Apart from singles, the trend is equally popular among widowed, divorced and separated home owners.
However, apart from benefits, there are several downsides of buying a property with friends. Let’s have a look on the pros and cons of this practice.
Advantages of Buying a Home with Friend
That’s the key benefit of purchasing a home with your friend! From deposit, interest rates, maintenance to utility bills, you share the expenses together which come with the ownership.
So, the costs shared by you and your friend will lower the burden from an individual.
Being qualified for home loans is really challenging as the lenders are very particular about debt, credit scores and tight down payments. Most of the people quit the dream to buy the home on this account only. With the pooling of resources with your friend, you make lot of thing easier for you in this context. In simple words, you have less expenditure after having a partnership with your friend.
Admit it. You and your friend have no longer to stay under one roof as one day you have your own ways. In this scenario, two of you would like to put the home on the sale and divide the money later on.
When either of you are not living for a long time, you can rent out the property to earn the fund as the source of income.
And There are Some Disadvantages Too………
On any given day, a problem can occur between you and your friend. Obviously, one of you may think to break the tie. But it’s not easy to do as both of you are officially subjected for mortgage.
A partnership can relieve the financial burden. But it can make you pay the home mortgage with other expenses alone if your partner is going through serious financial setbacks. It may be possible that you or your partner have disagreements over several responsibilities like paying for utilities or property maintenance.
Even if you and your friend have divided the home mortgage payment, each of you will be individual borrower for the entire home loan for other lenders. As a result, your debt to income goes higher, making it challenging for you to get approved for other loans.
If both of you collapsed and fail to pay, a lender will report this to the credit agencies, spoiling the credit history of both. You credit history may be even at the risk due to your friend non-payment status.
Buying a home with friend is beneficial only if you have done homework and have sufficient fund to make the monthly expenditures. But you must sort the differences beforehand by considering over various conditions like responsibilities, moving on and when one of you passes away.