Buying A Home

Is Mortgage Sharing a Good Solution for Cash-Strapped Homebuyers?

Written by Rebecca Lake

When you’ve got your mind set on buying a home, one of the first things you have to ask yourself is: can I really afford it? After all, you’re committing to making a mortgage payment for the next three decades, so there’s no room for doubt.

If you’ve crunched the numbers and found that you’re coming up a little short, you don’t have to give up on the idea of buying altogether. Sharing a mortgage–and a home–with a friend or family member is another path to homeownership.

Taking on a mortgage jointly with someone other than a spouse isn’t that different from buying a house on your own but there are some special considerations to keep in mind. If you’re interested in exploring this option, I’ve got some insight into what you need to know before diving in.

Mortgage sharing: How it works

Sharing a mortgage is similar to sharing a lease agreement for a rental except you both have an ownership interest. Both of your names appear on the loan and you’re both equally liable for paying the mortgage. When you go through the application process, you both have to meet the minimum credit score requirements and share your personal financial details, such as how much money you make, what you’ve got stashed in the bank and how much debt you’re carrying.

As far as your credit scores, you should be aware that the lender will use the lower of your two scores when making the final approval decision. Before you apply, you and your co-buyer should sit down and have an honest discussion about your credit and finances in general. You don’t want to get too deep into the underwriting process and find out that they’ve got a bankruptcy or a previous foreclosure on their credit.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website, RebeccaLake.net.

2 Comments

  • I want to refinance my mortgage but my credit is poor I’m try to get it fixed paying a lot of stuff on my credit is getting up there goes up and down I’ve been paying my mortgage on time my mortgage is around 1700 and I would like to get it down from there a lot more down

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