According to various studies, first-time homebuyers who make larger down payments tend to be successful homeowners. This is partly due to their larger savings, but also to larger donations and loans from their families. What other things should be considered before buying a home?
Getting Help From Those Around You
A family donation or loan can be a great help, but this arrangement should not be limited to hugging or shaking hands. Consider writing a contract detailing the terms of the agreement. How much money is given? Should it be reimbursed and, if so, when?
If the family member shares the house with you, how much will each of you pay for current expenses, down payment or closing costs? Who’s name is on the utility bills and what name will be on the deed?
Make it Legal
Have this contract drafted by a lawyer. This does not require a lot of billable hours, especially if you have had an open conversation with your family and have agreed on the above questions before meeting with the lawyer. There are plans out there that are intended to help another family member purchase a home for a variety of reasons. It is important to know that the person occupying the house must be on the deed, just like the co-applicant.
Although 35% of first-time homebuyers buy solo, there are many who will partner up later. If you start a relationship and let another person live in the house, he or she may have legal rights to the home. How does this happen?
If you live together long enough, then you can both become common-law partners, depending on the state, which can lead to rights and responsibilities for you both. How can first-time homebuyers protect themselves? By having an honest conversation about everyone’s expectations and responsibilities. The main question to settle is what will happen to the house if you split up.
Also, be sure to address daily financial issues down to the smallest detail. How will both share the current bills and when will they be paid? If a major expense occurs, such as a roof repair or furnace replacement, will both of you take on these costs? For more details, visit this URL.