Handyman · Northville, MI · Member since 2019 · 23 posts · 7 votes
Hey BP Community,
I and two of my close friends are looking to buy a duplex. We're looking for a 6 bd 2 ba where we can live in one half and rent the other half out, hoping that this will make our monthly payment very low. This is also our first step into real estate investing, as we are all due to move out from our parents houses soon and need to find a new place to live anyways. I'm currently looking into mortgage shopping and am doing a lot of research into the topic, and I then hit a thought that has caused me to hesitate: should we all put our names on the mortgage, thereby legally spreading exposure and allowing us to combine our resources (cash reserves, credit scores, etc.) or should one of us apply for the mortgage.
Also, if we all take mortgage ownership, do we get pre-approved together? How would that process look?
Thanks to anyone who takes the time to respond, this one has been (stupidly) causing me a mental roadblock and preventing me from taking action steps.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
6y
@Noah Barba this is somewhat hard to say. If you have good credit and your other 2 friends have terrible credit...then no, they should not go on the application with you. But if you need their income to qualify, and also need their assets, then yes...but maybe they don't need you. My thought here is that the less people on the application the better. Whatever the minimum amount of people needed to go on the application is all that should go on it. After you get the loan, it will show up as a the full payment on your credit...meaning, it doesn't get divided amongst you three. So the ENTIRE payment will be held against you from here out....even if there are co-signors.
Also keep in mind that OWNING is entirely separate from WHO IS RESPONSIBLE for the note. Meaning, you can have 3 people on TITLE....but only have 1 on the note. Title = who owns property. Note = who is responsible for debt.
I would also guide you to think about 3 things:
Who's money are you using for the down payment?
Who's income is needed for the loan?
If one person has no money, and isn't needed for the loan....then what do you do with that person? Meaning, are you giving away ownership rights in a property to someone that brings nothing to the deal? Just something to think about.