Just because two people are applying for a home loan together does not mean that the two people share ownership of the property. The opposite is also true: a property can have co-owners, where a party is not listed on the mortgage. It is essential that everyone involved understand the differences between a joint mortgage and a condominium.
In a joint mortgage, both parties are financially equally responsible for a house, but that doesn’t mean that they both have equal property rights. For example, a parent could take out a joint mortgage with their child to help them buy a house. However, they are not automatically listed on the act. Only the persons listed on the title and deed of ownership have ownership of the property.
Alternatively, a couple could get married after a person owns a house. The owner can add his spouse to the deed. This would make the spouse a joint owner, but they would not be a party to a joint mortgage and they have no financial (legal) responsibility for the house.
If you are looking for a joint mortgage loan, you can explore your mortgage options in minutes by visiting Credible to compare rates and mortgage lenders. Check out Credible to get prequalified today.
What is a joint mortgage?
A joint mortgage is a mortgage granted to several people. A mortgage lender will consider the income, credit history and employment status of all applicants. All parties provide personal information and sign final loan documents.
While many people think of married couples when they talk about a joint mortgage, this isn’t always the case.
For example, two roommates could take out a joint mortgage on a property. Investors could take out a joint mortgage together, or parents could take out a joint mortgage with their child.
If you’re considering a joint mortgage, use an online mortgage calculator, like the free tool offered by Credible, to determine your home buying power and what your potential monthly mortgage payments would look like.
Joint mortgages have many advantages, including:
- The loan is approved on the basis of two incomes, which increases the chances of approval.
- The possibility of qualifying for a larger loan amount.
- The potential to qualify for a lower interest rate.
- The financial responsibility for the mortgage is shared between several parties.
While a joint mortgage has many advantages, there are some drawbacks to be aware of:
- The mortgage application takes into account the credit rating and history of all buyers. This could potentially lead to a higher interest rate.
- If your co-borrower does not pay their share, you could be required to pay the entire purchase and / or face potential credit and legal issues if you are unable to maintain mortgage payments.
- A joint mortgage does not mean a condominium. This could lead to disagreements and confusion.
- If the parties disagree on a joint mortgage, the complications of managing the property can be complicated.
If you’re thinking about buying real estate, consult an online mortgage broker like Credible for personalized mortgage rates and pre-approval letters without affecting your credit score.
What is co-ownership?
Co-ownership means that more than one person has ownership rights to the property. There are several condominium options, including:
1. Tenants in their entirety: This type of condominium only applies to legally married couples. This agreement considers the couple as one person. Property rights pass to the surviving partner when the other dies.
2. Joint ownership: A co-ownership allows several people to share equal rights to a property. When an owner dies, their property is transferred to the surviving tenant (s) via the right of survivorship.
3. Community ownership: Community ownership agreements are like co-ownership. Both parties have equal rights to property during their marriage. However, when a person dies, their objects are submitted to the will of the deceased person. Each party can, but must not, hand over half of their property to their spouse. They could leave half the property to a child or someone else.
4. Joint rental: A joint tenancy allows two people to have ownership rights to a property, but they don’t have to be equal. For example, several investors could have a tenancy in common, with one investor owning 50% of the property and two others sharing the remaining 50%. This type of property can be used to create timeshare.
Co-ownership has advantages:
- Both parties are guaranteed to always have a home if the co-owner dies.
- Parties who share a condominium have rights to rental income or other benefits on the property.
Some disadvantages of condominium include:
- Potential for problems in case of divorce or if the dying party wants to own someone else.
- Some condominium options can complicate taxes and fiscal liability.
- If one party owes creditors, the other homeowner could face potential problems even if he does not benefit from the debt.
Ready to move forward with the purchase of your home? Explore your mortgage options by visiting Credible to compare rates and mortgage lenders.
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