Expert: Jessica Bryan - 11/30/2010

Question
I'm looking to purchase a home with 3 friends(4 people total including me) i was wondering what is the best way to go about that and obtaining a loan to purchase the home from the bank? We already have a realtor were dealing with and already have a house that were interested in. Would all of us need to be approved for a loan to do a multiple ownership on the house or would it be alright if just one of us got approved for the loan(i have a house that is in my credit from where i owned one for 5yrs, no longer own it) and the other 3 payed that one person monthly payments as if there "renting" it from that person? We are located in Ohio, Columbus.
We are all first time buyers except for the fact that i have that owned house in my credit.

Does it help that i have a previously owned house in my credit?
Where would be a great place to obtain a loan? bank? mortgage company?  

Answer
Dear Kevin;
With four unrelated people buying a home you need to make sure that you take title correctly and should consult an attorney about ownership and responsibilities if someone defaults on payments.  A lender will have difficulty with qualifying each of you.  Your credit will have to be really good!  The lender can look at credit history and decide who qualifies.  If they just base it on one person's credit history they also have to take into account what the monthly income of that person is.  Even if you consider that your income will include monthly payments from the other three the bank will not take the full amount as a consideration.  You should talk to a lender as soon as possible.  Requirements are stringent. For this situation it would be best to work with someone who is familiar with several different programs not just the basic ones from a bank. I would go with a mortage company that can shop the variety of programs available from many banks.  Ask your real estate agent for a referral.


Best wishes and good luck.
Jessica Bryan