Purchasing a house with a close friend of yours seems like a good idea at first. Depending on your relationship with your friend, buying a house with them could go a few different ways. Before either of you settle on buying the house there are a few things both of you should address as you continue looking for a house. Buying a house is a big responsibility and needs to be thoroughly thought out before closing. Here, we will talk about some reasons you may or may not want to buy a house with a friend.
Finances
The biggest concern of buying a house with a friend is the financial responsibility that it outs on both of you. In some cases, you and your friend could be paying a mortgage for years to come. Therefore it is a top priority for you both to be transparent about your finances and what both of you are willing and able to pay for a house. Finances are also accounted for when shopping around for a mortgage for the house. Credit scores determine how much someone will loan you as well as what kind of interest rate you will have on that loan. Open communication and honesty about your financial history is crucial in this process.
Sharing Expenses
In the long run, sharing all expenses with a close friend could turn out to be cheaper for both of you. Both of you are building equity for yourselves in the process, and both equally own the property. You will have to talk through what kind of splits will be done for the expenses. How much of the mortgage will each individual be paying, or will it be an equal 50/50 split? Discussing expenses is the next step in determining if you and your friend are suited to buy a house together.
Other Responsibilities
Responsibilities that are not related to finances should be taken into consideration if you have not lived with your friend before it may be worth discussing how each of you operates as individuals. Asking each other what kind of lifestyle you both live and thrive in are just as important to answer so that each of you understand how you both will work together.
Buying a house with a close friend can be a great idea and a great way to start to build equity for yourself. The decision to buy a house with a friend should never be met without caution and proper planning.