DubbleUpp: Buy with a Friend
Buying a home with a friend can have big financial benefits:
1. Easier to Qualify for a Mortgage
It may be difficult to qualify for a mortgage when buying a home on your own, but this process can be much easier when you buy with a friend.
2. Ability to Buy a Larger Home
Combining your income with your friend's income can help you qualify to buy a much larger home that better suits you and your friend's needs and offers better potential for increased equity.
3. Split the Down Payment and Closing Costs
You and your friend will share the down payment and the closing costs, so buying with a friend will only require half of the money that you would need to buy the property on your own. Having another person help with the costs will minimize your risk and could make the whole process less overwhelming for you.
4. Shared Monthly Expenses
As a homeowner, it’s your responsibility to pay for utilities, maintenance, and repairs in addition to the mortgage payment. The extra expenses that come with homeownership scare some people.
However, friends who purchase together share these expenses, essentially splitting the financial costs. Plus, sharing expenses improves your personal finances by giving you the opportunity to build your savings account or pay down debt.
5. Home Equity Gains
The longer you and your friend live together and make mortgage payments, the more equity you gain. One day you and your friend may decide to sell the home and homeownership lets you walk away with cash in your pocket. The two of you can split proceeds from the sale and put the money toward a down payment on your own home.
6. Mortgage Interest Deduction
When you own as opposed to rent, you pay interest on the mortgage, and that interest is deductible on your taxes. The higher your income, the more benefit you’ll see from this deduction.
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