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karenrae · May 6, 2007, 11:46 PM

I find myself in a tight situation with my house payment & household expenses. My friend has decided to come in on the house with me. The house is in Sun City, Arizona, and I have had it for 6 mo. Our plan is to keep my original prime loan. My friend will reinburse me for half my original downpayment and improvements & I will put her name on the Title or Deed. We will share the normal monthly payment from that point on. Will that arrangement have to be reported to my Loan Company, and is a separate written personal agreement legally binding to our heirs? Is there a better way to do this?

excon · May 7, 2007, 06:37 AM

Hello karen:

Your bank isn't going to go along. When and if they have to foreclose, they want to be the ONLY ones claiming ownership. Therefore, if you put her on the deed, the bank will call in your loan.

The simplest, and cleanest way to do this, is for you to sell the house to a partnership (made up of you and your friend). The partnership will have to seek its own financing.

If there's a reason NOT to do this, there's another more complicated, yet legal, way to do it by contract. However, you do it, you're going to need the services of a real estate attorney. Otherwise, both you and your friend will be taking great risks.

excon

ScottGem · May 7, 2007, 06:50 AM

I agree with excon to a certain extent. But I think you need to talk to your lender. Your lender is NOT going to let the ownership of the property be changed without their permission. However, if it means, making their loan more secure, they may be willing to let your friend be added to the mortgage as well as the deed.

Fr_Chuck · May 7, 2007, 07:16 AM

Yes taking with the bank (lender) is the first thing, since they hold a lien against the entire property as you as owner, if any part of the property is deeded to someone else ( thus ownership also) the lender will have to be sure that they also have a lien on their share of the property. In some cases this will be no problem, with some lenders they will want a new loan or just will not allow it.

Also remember that unless their name is added to the mortgage, you alone still owe it and also do not have full ownership of the proeprty.

Also you need to have a written contract in place as to what happens if one of you wishes latter to move out, a contract that will state who owes who what and so on, What if in 10 years you want to sell out your part and move, but the other party does not want to, what do you do, all that needs to be spelled out specificly.