Should You Buy a Home with a Friend?

Buying a home with a friend is not something to be taken lightly. If you and your friend are already roommates at an apartment, you may be considering moving into a bigger place with them as the next step. You may see your friend as someone whom you can rely on and live with for quite some time. If your friend has their finances in order, is trustworthy, and reliable, then maybe itís time that you considered buying a home with your friend.

Should You Buy a Home with a Friend

Look at Your Individual Finances

You may have a great career but does your friend? If you and your friend have some money saved, great credit, and a willingness to look for a home together, then start looking. If you have money in investments, or this isnít the best time for you to save money from your paychecks, then you should put off buying a home until both of you have your finances in order.

When You Should and Should Not Buy a Home with a Friend

If you are fortunate enough to have a friend/roommate who is reliable, has good income, and stable credit, then you are in a good situation to buy a home together. If both of you are tired of giving your money away to monthly rent at an apartment, you should start saving up with your friend for a home. Be sure to save up enough for a strong down payment on a home you like.

However, if your friend is unreliable, has bad credit, and financial issues, do not buy a home with them. If your friend is the one who brings up the possibility of buying a home together, then itís probably best that you split ways from this person if they want to move soon. The last thing you want to do is affect your credit and finances by buying a home with a friend who is unreliable and not financially secure enough to pay the monthly payments.

How to Buy a Home with a Friend

When you do have a friend who is as reliable and financially ready as you are, then you should go forward in your search to buy a home together. First, both of you should agree on a real estate agent who you want to contact. Then, have them help you both look online for listings available that you would like to live in. If you find a great home for the right price, you, your friend, and your agent should contact the listing agent to see if you can have a tour of the home. If the home fits you and your friendís needs, then itís the right home for you. Youíre now ready to move forward with the financial process of buying the home!

Should You Buy a Home with a Friend

Legal Advice

Make sure that you both seek legal advice. You can find real estate attorneys online who are willing to help you with whatever legal information you need. Ask the real estate attorney to help you and your friend determine how to go about the amounts that you will have to pay into buying the home. They will draft up a legal document for you to keep things in balance while you and your friend live in the home together. The attorney will also help you determine how you both hold the title. This will allow you both to determine what happens when one of you decides to move or in the tragic event of one of you passing away. A great way to go about buying a home with a friend is tenancy in common. Tenancy in common allows multiple people to have equal or unequal portions of a property as well as the individuals being able to sell or give away their share of said property at their leisure.

Have an Exit Plan

An exit plan will help you both in the event that either of you becomes delinquent or unwilling to pay half of the home payments every month for whatever reason. Your legal document should have a plan in place that allows either of you to move or sell the home at a later time. A time notice should be put into place so that the roommate who wants to move or sell allows the other roommate time to also find a place to move to once the home is sold.

Should You Buy a Home with a Friend

Buying a home with a friend is a great investment to build equity and advance to the next stages of your life. However, there should be plans and safeguards in place to ensure that both of you are ready for this kind of commitment. If you and your friend do decide to buy a home together, good luck in your search for the perfect place for you both!