How To Buy A House With Family And Friends

With rising housing prices, it can be hard to qualify for a mortgage on your own. If you are struggling to qualify for a mortgage large enough to purchase the house you want, you may be wondering if buying a house with family and friends is a good idea.

Lately, there has been an increase in family and friends buying houses together. Buying a house with a family member or friend can provide several advantages, but there are also some notable disadvantages.

Advantages of Buying a House With Family and Friends

Bigger Down Payment, Lower Mortgage Payments

When buying a house with a family member or friend, they will often contribute to the size of the down payment. Usually, a bigger down payment will lower your mortgage payments. This also means that you will usually have more equity in the house from the start.

Greater Purchasing Power

When you buy a house with a family member or friend, it is common to be able to afford a larger purchase. This is because you have more income to rely upon to make the monthly mortgage payments. The ability to afford a bigger mortgage can be a huge advantage when looking to purchase a house in an expensive area.

Shared Responsibilities

When you are considering buying a house with a family member or friend where both of you will share in its ownership, then the cost of its upkeep and maintenance can be shared as well. When these expenses are shared, the cost is lower per person.

Disadvantages of Buying a House With Family and Friends

Partnering with a family member or friend can make it easier for you to buy a house. But buying a house comes with a great deal of responsibility, and there is a lot that can go wrong. Here are the biggest disadvantages of buying a house with a family member or friend:

Different Intentions

Before buying a house with a family member or friend, make sure that you discuss what you intend to do with it. What if one of you intends to buy, build, and sell, but the other intends to buy and hold? Make sure to discuss what should happen if one partner wants to sell the house, and the other doesn’t, as well as when and under what conditions the house might be sold. Discuss all the possible scenarios and options since you don’t know what will actually happen.

Loss of Income or Employment

Buying a house with a family member or friend can make it easier for you to get into the market. But you will still be individually responsible for the rest of the mortgage if your partner becomes unable to contribute financially. It is, therefore, important to have a contingency plan in place that will ensure you will be able to make your mortgage payments if you or your partner can no longer contribute due to loss of income or employment.

Also, consider what happens if you or your partner were to pass away before the house is paid off. The survivor will be left to pay off the rest of the mortgage alone. Purchasing life insurance is the ideal way to plan for this possibility, and each partner should purchase a policy with enough coverage to pay for their share of the house if they pass away before the mortgage is paid off.

Interpersonal Conflicts

It is not uncommon for family and friends to purchase property together. But a mortgage should only be shared between individuals who have a strong interpersonal relationship. A joint mortgage with a family member tends to work out more often than a joint mortgage with even a very close friend. Either way, your relationship with your potential partner should be seriously considered before entering into any mortgage together.

Contact Speedwell Law to Consult With an Experienced Virginia Estate Planning Attorney

The bottom line is that buying property with others is a huge commitment, and one that should not be entered into lightly. If you are thinking about buying a house with family and friends, consider all eventualities carefully, and discuss them openly with your potential partners before leaping into homeownership together.

It will also be in everyone’s best interest to discuss the matter with an experienced estate planning attorney, who can help you and the other parties involved address the various estate planning issues that arise when buying a house with multiple owners. In Virginia, contact Speedwell Law at (703) 553-2577 or use the contact form on our website to schedule a consultation with a qualified Virginia estate planning attorney.

The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.