Not everyone has the financial capability to buy a home on their own. Some people prefer buying a home with someone that they can trust. It makes it easier to save up for a down payment when one is helps helped are purchasing property with someone else.
People buy properties with their parents, siblings, and even friends in many scenarios. There are a few ways this can happen:
Common Buying Scenarios
You may not know this, but more than 22% of parents out there prefer to cover either a part or the entirety of the down payment that their children have to pay for their homes; some even go as far as to pay the mortgage payments every month so that their kids can live rent-free. This mostly happens during the educational years. It is important to note here that these parents would likely keep 100% of the ownership of the property, but it is possible that they could pass it down to their kids once they can pay the mortgage every month.
In many of these cases, the parents that help their children with either the down payment or the mortgage payment occupy a part of the house themselves. In a case like this, the property’s overall value will be shared, and it depends on how the down payment and the monthly cost will be divided amongst the children and the parents.
With the way the prices in the real estate market are climbing, it is becoming more and more common for people to purchase properties with either their friends or siblings. The easiest way to go about this would be to split all the costs 50/50, right down the middle, which includes down payments, mortgage payments, and any expenses. If there are any hesitations from either party, they have to draft a cohabitation agreement.
Cohabitation Agreements
When you buy a property with someone who is not your spouse but will be living with you, it helps to have a cohabitation agreement written up by a real estate lawyer. It sets out the rules of the specific purchase, along with any expectations and agreements between the parties that will be living together. It is entirely up to you to decide what goes in that agreement. You can include a few things in the cohabitation agreement: the homeownership, expenses and mortgage payment, and the minimum time required to sell the property since it could be anywhere from six months to 10 years or more, depending on what the parties want.
Cohabitation agreements are not limited to these specific situations and can also be drawn up for an individual that moves into another individual’s home, which can include expenses, rent, and even asset splitting.
Still have questions? Contact your friends at AlpharettaZen now for more information on how to get started on your next property.