Co-ownership on mortgage

[Soulpieced]

Alright, I know that in most (some?) cases married couples will co-sign on the mortgage for a house. What I'm wondering is how many people actually have someone (other than parents) co-sign on a mortgage like a dual-ownership type of thing? I understand the pros are obviously a stake in the place, and main cons are what do you do when one wants to move out, and how to split the $$$ when you want to sell the place.

I ask because I am considering going in about 5k with a good friend of mine from work, whom I was planning on living with anyway, on a place that will probably be in the low 200s. He was originally planning on doing one himself with about 8k, which will probably cover closing fees and a teeny tiny bit of a %, but not much. Now, if I put some dough in, we could probably get between 3-5% down, which would decrease the monthly payments by a decent amount. But the main thing would also be I would have a stake in the equity, which in my area = a big ass increase in $$$. Just to give an idea, housing prices have increased around 75% in Arundel/Howard/Baltimore counties since 2000.

Questions, concerns, or comments?

[Edited on 6-7-2005 by Soulpieced]

[Warriorbird]

Figure out your equity stakes now.

[Tsa`ah]

Friends and money do not mix ... at all.

To many variable and all lead to one conclussion; legal action.

[Suppa Hobbit Mage]

Figure out the investment from both sides, and then move forward (maybe get a lawyer to ratify it or something? I don't know). If you don't buy with him, buy something yourself.

I purchased my *townhome* for 245k in 2003 and sold it in 2004 (9 months later) for 315k. You can't beat that type of turn around... well, nor can you count on it.

Anyway, I'd buy. My regret from Virginia was I didn't buy in 2000 when I got there.

[Soulpieced]

Well, that's what I was thinking Suppa. What's better, having 12k sitting around in the bank, or taking a little chance on not only a place to live, but a stake into some future cash for not too much risk. I was fully planning on getting something in writing as to how the proceeds would be split when the place is sold.

[Tsa`ah]

You would have to agree on a sell date, otherwise you're out the money until the other side decides to sell. Likewise, the other side is out the money until you decide.

You also have to ask yourself if your friend or you can afford a buy out.

If the answer is no, not now, not in 5 years ... I'd go solo.

[Soulpieced]

Well, if one person wants to move out, you just lease the room out. Only thing with that is obviously the money either of us puts down in the first place. But I am sure both of us would end up living there for at least 1 or 2 years. Again, these are things that we would go ahead and discuss and get in a contract beforehand. After all, both of us work in contracts :cool:

[Edited on 6-6-2005 by Soulpieced]

[Soulpieced]

To clarify, it wouldn't exactly be a cosign, as that would mean I am securing his loan. I'm not sure what the term is called, but we would just have it so both of our names are on the mortgage as owners.

[Back]

Usually its standard to put down 20% from what I understand. You might look into a 3-5 year ARM, interest only. That will keep the payments way down.

[Back]

As for the co-ownership, I’d be very selective on who I went in on it with. Very, very selective.

[Soulpieced]

Well, that's the sort of info I'm looking for. What sort of selective criteria are you talking about Backlash.

[Back]

Well, like others have mentioned, money and friends... its a tough mix. Just need to know they aren’t going to flake on you. And seriously consider ways of protecting yourself if you do. In matters of business with anyone, mutual DISTRUST serves better than trust.

There must be some kind of contact you can have written up for the venture.

[Jennaen]

If you have cash sitting around, why not just by something small for yourself? Then none of these potential issues have potential to be issues.


However, my soon-to-be ex and I had co-ownership of our townhouse. When we split up, I simply refinanced the house in my name alone. I'd assume, if one or the other wanted out, you could do the same, and then split any equity per your prearranged agreement that you had an attorney draw up when you bought the real estate together.

dont do it

[Wezas]

put down 20%? Jesus.

One of my co-workers went in on a new townhouse with his girlfriend. They split up - and both are still on the lease. They're both seeing other people now, and she's not living there (but still paying her part of the mortgage). He doubts he can buy her out, so he's going to have to sell and move to a different place.

Get everything down on paper. What to do if X happens, what to do if Y happens. Everything from someone moving out to someone not being able to pay their portion of the mortgage.

SHM, my boss bought a condo in Alexandria for $280k. She stayed in it for 2 years and then sold it for a little over $400k.

Even my 50+ year old house has gone up almost 100k in value in 3 years.