Co-Ownership Gets Popular as Lending Tightens
Real estate co-ownership arrangements are becoming increasingly popular, especially in cities where prices—even after the real estate meltdown—remain out of reach for many buyers.
Lending guidelines have tightened and it's twice as hard to qualify because of the housing market and sub-prime situation. People just don't qualify like they used to. But if they get some friends and put money together, they can afford that 20 percent down that you may need to purchase if your credit or work history are not excellent.
While financing may be easier, these arrangements have the capacity to fail. It's recommended that people who are considering a joint purchase hire a lawyer to draw up a co-ownership agreement, including a plan to get out of the arrangement.
Here are some other tips for co-buyers:
Before you begin looking for property, decide the geographic and financial ranges for the search.
Understand potential co-buyers’ finances; lenders will look hard at the finances of all partners in the deal.
If the property is a condo, understand the rules regarding rentals, just in case one partner needs to move out.
Put everything in writing, particularly the escape plan.