Rising rental costs and low-rate mortgages make buying a house now rather than later seem like an attractive option for a growing number of unmarried people. While this can be a positive move, be prepared to make some important decisions.
Have a Plan in Mind
Before you go out house shopping you want to have a plan that lays out what happens to the home you own together. It’s important you are on the same page with your goals and whether the property is going to be just an investment or a personal residence. Even though you and your brother or your best friend are getting along great and work well together now, you need a process to guide you through in case your relationship turns sour and you do go your separate ways.
Decide How to Manage Costs
Talk with your partner not only about how much money you are willing to spend but also about your creditworthiness as this will impact your ability to get a mortgage and how much interest rate you will have to pay. If you don’t already have a joint bank account, you might also consider setting up one. This makes it easier for you to pay the mortgage, property taxes and maintenance costs. Decide on a housing budget you and your partner are both comfortable with. When you cosign on a mortgage, you are liable for the debt, so think about if it’s really necessary to stretch your maximum budget.
Have an Agreement in Writing
Discuss what you plan to do with the home and get those points in writing. A real estate attorney can help you with creating a legal document that outlines all the details of your arrangement. It should say whose name is on the deed, and who will pay for what. Be specific and go through plausible scenarios. Know the answers to questions like “What happens if one party can’t pay anymore? Who handles the maintenance and repairs? How will potential sale proceeds or rental income be split up? What happens if one party wants out of the investment and the other person does not?” and put the details in writing.
Title It Right
It’s important that you and your partner decide on how you will hold title to ensure that everyone who owns the home is considered a legal owner. This link gives you an overview of ways to take title in Arizona.
By: Patricia Madigan