11-14-2012 12:35 PM
My husband and I are looking to buy a 2-flat with another friend of ours. None of us want the full responsibility of a SFH but we all dislike condo's and their rules. So a 2-flat or even 3-flat seems a great idea, a nice large unit each with free reign over the yard, common areas, etc. to do as we like. And in the case of a 3-flat, possibly cover some costs with a tenant.
Now, we were under the impression that we would be able to each have our own mortgage to this one property to avoid annoyances like only one person being able to deduct interest from their taxes and such. I think we thought this based on people having a second mortgage on one property. But now I am to understand that 1 deed means 1 mortgage.
First, is that correct? We must all three obtain one mortgage together?
Second, is it correct that the mortgage would likely be based on the lowest credit rating of the group? We are all very good but one guy is stellar.
Third, is there any feasible process that would split the property so we could have seperate mortgages? Or would that mean forming a co-op or creating even more ridiculous issues?
Fourth, is there any benefit to forming an LLC or trust? We aren't going to be buying additional properties to rent out, we just want a home that we invest in together and want the best possible mortgage.
11-14-2012 06:26 PM
Yes, everyone loves each other now but you just don't know what the future may bring. Doesn't even have to be anything bad, just changes in life.
go 3 flat
you'll need to put together a partnership, LLC, or other entity to make it work
hire an attorney
talk to a mortgage broker, you'll need one mortgage
you could subdivide later but I wouldn't recommend it
put together an list of expectations and dislikes and share with each other , this will help show how compatible you really are or are not
11-15-2012 02:20 PM
- In terms of financing you would need one mortgage with the three of you as primary occupants of the property.
- Yes, the rate offered that is typically offered is based on the lowest of the 3 borrower's scores.
- Again, it would have to be one note/mortgage.
- I would get an attorney to advise you as to the LLC/Trust/ownership percentage. Please note limited lenders will close in an LLC or Trust so check with your lender first.
Hope you can make work.