How to Buy a Condo With a Friend
Buying a condo with a friend is sometimes a wise decision. It allows buddies to share more space and amenities than an apartment may provide and is usually less expensive than buying a house or condo alone. However, there is more to think about than the cost savings. Sharing a property and mortgage with a friend requires a written legal agreement to prevent any misunderstandings.
Other People Are Reading
Instructions
-
-
1
Discuss how to transfer ownership of the property if one person dies. Consult legal options with a real estate attorney. Possibilities including allowing both parties to will their respective ownership share in the condo to parents or a sibling, with the surviving friend having the right to buy the share for the fair market value at the time. Or The Washington Post reports that friends may enter into a contract declaring that they are "joint tenants with the right of survivorship." That means in the event of a death the surviving friend would receive full ownership.
-
2
Develop an agreement for what happens if one friend simply decides to move out or wants to sell. Consult with the real estate attorney for options.
-
-
3
Get individual credit reports. Each friend should obtain his credit report for free from AnnualCreditReport.com. The site offers free credit reports under the terms of the Fair Credit Reporting Act. After obtaining the reports follow instructions on the reports for purchasing credit scores for a fee.
-
4
Share credit score information. Scores of 720 or higher lead to the best interest rates on mortgage loans. Scores below 620 are poor. The friends should discuss credit issues before applying for a mortgage. Approval is possible if one friend has a 750 credit score and the other has a 600 credit score. However, that could cause friction by resulting in higher monthly payments and a larger down payment required by the lender.
-
5
Apply for a mortgage loan at a bank or credit union. Both friends should complete the application process at the same time. Provide all information the lender needs to make a decision, including tax returns, pay stubs and W-2 forms.
-
6
Hire a real estate agent after preliminary mortgage approval. Find a condo to buy and work with the lender and real estate agent to complete the transaction. Share all documents with the real estate attorney before signing.
-
1
