When it comes to purchasing a home with a partner, details must be taken into consideration. One of the most important things you should consider is a potential split-up.
You wish it wouldn’t happen, but an agreement has to be established anyway. Legal advice can be offered by attorneys if you consult them. Aspects that you should always remember are presented here. When you want to design your agreement with your domestic partner, remember that the best solution is to sell the home in case you two will break-up. No one will have to deal with financial troubles when it comes to the home or mortgage in this case. The only problem remains the way you decide to divide the proceeds of the sale. As in a business partnership, this usually happens according to the partners’ contributions.
Otherwise, in case there is no agreement and one of the partners wants to remain in the house, you will face a very complex process. You have to start by valuing the property and get an estimate. The partner who remains in the house is supposed to pay the other partner his part. In most of the situations, this won’t happen because there are no means available. A home equity loan might seem a good option to pay the partner who leaves. Unfortunately, this approach isn’t likely to be allowed by banks. Other thing that you can do is to take away from the loan the partner who leaves. In an insecure mortgage market, this will be a difficult step. No lender will be willing to take more repayment risk by agreeing one partner to be removed from the mortgage.
In order to have the means to pay off the money he owes to the other partner, the staying one could try to refinance the loan. Maybe you ought to let the remaining partner be responsible for the refinancing or the selling of the house in a period of time you both establish, in case you are thinking of purchasing a home. In case you face a declining market, don’t except your house to be worth the amount of money you paid when you bought it. Refinance will be impossible and deficiencies will be faced by partners when they will pay off the mortgage.
This way, two alternatives will become available for you to examine. Either you opt to negotiate with the bank for a short sale, or you can have your home go into foreclosure. None of them represent a good solution and they will affect the credit of the partners. Buying a house can be a wonderful thing; nonetheless, every detail matters so you should consider it. Even though you buy it with a partner, it can be special too, but make sure in case you break-up, you won’t have to face troubles. It is advisable to be prepared for different situations if you want to avoid big conflicts.
Author: Thomas AlistrikThis author has published 1 articles so far.