Priced Out of Market, Families Pool Resources
With home prices remaining super high and an increasing number of families finding it difficult to qualify for a mortgage, it’s understandable that shared housing is re-emerging as a trend.
The concept of two family units or friends combining resources to purchase and live in a single home, or a number of families living in a co-housing development, is growing in today’s market.
According to the Canton Repository, co-housing, where multiple family units share accommodations and responsibilities, first emerged in Europe, but soon became popular in some areas in the United States and Canada.
“It offers an end to the isolation of single-family homes,” stated in “The Cohousing Handbook,” published in Canada. “Residents own their own homes and can gather in common areas to share meals and socialize.
“It addresses and alleviates many of the demands and pressures of modern life - everything from day care for the kids to aging at home. It’s all easier with the help of your close neighbors.”
Shared ownership is more prevalent with second homes, or vacation properties. High home prices for these residences often prohibit purchase by an increasing number of individuals and families who would like to own a dream vacation home, or at least an ownership share in one.
Americans are finding that participating in a joint ownership arrangement with one or several others, a second home purchase loan can be feasible.
In some cases, people who own a vacation home are now selling ownership units in their property. It’s a viable way to generate cash, without sacrificing any time that they can spend at their vacation home.
When purchasing a second home jointly with others, it’s common to take title with a tenancy-in-common agreement, with each owner arranging for their own second mortgage loan financing.
Some participants tap into the equity they have accumulated in their primary home to pay for their investment share in the second home or at least the down payment, before getting a second mortgage.
Some lenders now offer “fractional funding” mortgages - loans tailored specifically for group ownership situations. Under one plan, everyone in the ownership group shares one mortgage loan.
In another plan, each participant arranges his or her own financing. In either case, these mortgages are structured in a comparatively simple manner with special advantages for group buying participants.
If you are interested in participating in the group purchase of a vacation home and need financing, ask several home loan lenders if they offer a fractional mortgage financing plan. Then compare the terms they offer.
SOURCE: Canton Repository