Coming up with the money you need to buy a house can seem out of reach for many people to do alone. According to a recent survey, about half of Americans are willing to split the cost of buying a home with someone else.
Buying a home with your sibling may help you pool your resources and get into a nicer home than you could afford alone. But there are a few steps you’ll want to take to make sure the experience is a positive one. We’ll explore these below, as well as the pros and cons of co-owning a home with your sibling.
Key takeaways:
Take a long, hard look at your financial situation as a whole. Each of you brings a certain set of circumstances to the table. Your combined and individual finances can make a difference in the type of home you can afford and the types of loans you may qualify for.
These are the factors you’ll want to consider before you start your search:
Be honest with each other as you have this conversation. This way, you’ll know exactly where each of you stands.
When you’re buying a house with a family member, you’ll want to establish a clear ownership agreement. This outlines what happens to the property if one of you passes away. There are two main ownership options to consider:
Ultimately, the ideal ownership agreement will depend on what works best for you and your sibling.
Real estate attorneys can help you protect your interests by making sure ownership agreements and any questions of inheritance are established legally and in a way that works for your needs and goals.
Your attorney can help you and your sibling come up with an agreement that works for both of you. And if there’s ever a dispute, your attorney can help you find a solution while still honoring the contract you and your sibling entered into.
Here are a few questions you’ll want to ask each attorney before you commit to working with them:
The right real estate attorney should have experience working with siblings or at least helping two or more buyers purchase a home together. They should also be willing to communicate with you in a way that works for you, whether that’s via email, phone calls, or text messages. You’ll also want to make sure you can afford their fees and that you’re comfortable with how they bill for their time.
To protect both of your interests, you and your sibling will want to create a clear ownership contract. At a minimum, you’ll want it to touch on the following terms:
This written agreement will be legally enforceable, giving you both peace of mind. If you enter into a dispute, the contract will provide guidelines for how you can handle those disagreements.
Before you start touring properties, take some time to discuss what you both want the property to have and what you both need in a home. This will depend on your situation. Take your time and come up with a list of wants and needs that you both agree on.
Using that list, you can start looking at properties that meet your needs. Consider working with an experienced real estate agent who is familiar with helping siblings purchase homes together. Real estate agents can explain the ins and outs of buying a house with a sibling, making the process easier. They can even help you negotiate the best price on your new home.
Remember, you may need to view several properties before finding the perfect home. As you tour each property, be open and honest with your sibling and your real estate agent.
Buying a home with a sibling can be a great way to get into a nicer or more expensive home, but it’s not the perfect option for everyone. Here are a few pros and cons of co-owning a home with a sibling that you’ll want to be aware of.
Buying a home with a sibling can make homeownership more affordable and less risky since you’ll be buying with someone you already know and trust.
Sibling co-ownership isn’t the perfect fit for everyone. If you and your sibling aren’t on the same page and confident that you’ll be able to live together harmoniously, you could end up hurting your relationship in the long run.
Here are a few frequently asked questions about buying a home with a sibling so you can make the best decision for your situation.
Siblings can buy a house together. By pooling your resources, you may be able to get into a nicer home than you could on your own.
Every situation is unique, but many siblings buy property together as co-borrowers with a joint loan. Co-borrowers are responsible for making mortgage payments and contributing to the upkeep and maintenance of the home together.
Siblings can get a home loan together by applying as co-borrowers on a joint mortgage. Each lender will have different requirements, so do your research.
Most lenders restrict joint mortgages to four borrowers over the age of 18. However, there is no legal limit in place, and some lenders may allow more siblings to apply.
Siblings can contribute equally to the home purchase if they want to or can afford to. However, if one sibling makes significantly more, they can choose to assume a greater portion of the mortgage, upkeep, and other costs.
Buying a house with a sibling can be a great choice for buyers needing help to qualify for a home. But before you start looking at homes, have an honest conversation with your sibling about how much you can afford to spend and what types of loans you may want to apply for. Once you’re on the same page, compare mortgage rates at Credit.com to find the best home loan for your needs.
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