How To Split Profits With 2 Owners When One Pays The Down Payment
Hi - my boyfriend and I are going to buy a house $500,000 house together. I will be providing $100,000 down payment and we will be splitting the mortgage payments for the $400,000 loan. The mortgage will be taken out in my name as his credit is bad and mine is good but the title will have both our names. In the future, if we sell the house for $700,000, how do we split up the profits fairly?
Regards, Karen
i agree, i think the above poster got mixed up with who's putting the dowmpayment.
anyway,here's what i would do.
dont put him on the title. if the loan is in ur name, dont put anyone else on the title at all.
if you guys break up(i'm a pessimist) and he suddenly decides to stop paying you're stuck with the full payment and you can even evict him, since he's on title.
better thing is you charge him "actual market" rent for staying in YOUR house. if he wants a tax break, he might be able to get it coz he's paying the interest and taxes(talk to a CPA). but please talk to a lawyer before you do ANYTHING. the last thing you want is to lose your house, and half of your 100K.
Just my opinion, I would do something like this.
He should have a 3/5th interest and you should have a 2/5th interest. Split the mortgage payments evenly, give him a second on the home.
He's responsible for 300K of the mortgage and you're responsible for 200K of it. He may want something extra due to his financial risk and second position (such as being paid 8% interest on the 100,000K for the time that you hold the property)
Or you could treat his funds as though he were a lender (pay 8%, 1 point) and split the profits evenly after you pay him back (plus interest).
A "friendly" deal...knowing how often these deals go sour, when the relationship sours, I'd sure advise you have your lawyer write it up.
Just like any other business agreement, so everything is in writing, nothing left out.
Just as in the best planned marriages these days. With a pre-nuptial agreement so there's no doubt, no questions about who owns what, how it's paid, who gets rent & income, etc.
The more carefully you plan all this now, the easier it will be on you both if/when you do break up.
I totally do not understand your advice. If I'm the only one providing the down payment of $100K, why should he have a larger interest on the property? Don't you mean I have a 3/5 interest and he has 2/5? And why should I be paying him 8% interest on $100,000 of my money - don't you mean he should be paying me 8% interest instead? How can I treat my boyfriend as a lender if I am borrowing from a financial institution for the $400,000 and he does not have $400,000??
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On 2003-08-21 11:26, hibby76 wrote:
Just my opinion, I would do something like this.
He should have a 3/5th interest and you should have a 2/5th interest. Split the mortgage payments evenly, give him a second on the home.
He's responsible for 300K of the mortgage and you're responsible for 200K of it. He may want something extra due to his financial risk and second position (such as being paid 8% interest on the 100,000K for the time that you hold the property)
Or you could treat his funds as though he were a lender (pay 8%, 1 point) and split the profits evenly after you pay him back (plus interest).
I agree with the last poster. You are putting down the downpayment. And you have the good credit. He is putting nothing down and is in no way helping on the deal. I would buy it soley in your name. If everything works out great get married and its community property anyway. If it doesnt you are not going to get screwed. Think with your head on this one. Not with your heart
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Thank you for your advice. I will definitely consult a lawyer. Any recommendations? I am in California.
On 2003-08-21 14:52, dgtop wrote:
I agree with the last poster. You are putting down the downpayment. And you have the good credit. He is putting nothing down and is in no way helping on the deal. I would buy it soley in your name. If everything works out great get married and its community property anyway. If it doesnt you are not going to get screwed. Think with your head on this one. Not with your heart
Wow. Thank you so much. I haven't even thought through about what happens if he or I can't make the payments.
I prefer if we both have equal share so maybe we look for a cheaper house without a down payment and just split the mortgage and iron out the liabilities if either one of us defaults on the mortgage payment.
I will definitly talk to a lawyer. Do you have any recommendations? I live in California.
Quote:
On 2003-08-21 14:24, niravmd wrote:
i agree, i think the above poster got mixed up with who's putting the dowmpayment.
anyway,here's what i would do.
dont put him on the title. if the loan is in ur name, dont put anyone else on the title at all.
if you guys break up(i'm a pessimist) and he suddenly decides to stop paying you're stuck with the full payment and you can even evict him, since he's on title.
better thing is you charge him "actual market" rent for staying in YOUR house. if he wants a tax break, he might be able to get it coz he's paying the interest and taxes(talk to a CPA). but please talk to a lawyer before you do ANYTHING. the last thing you want is to lose your house, and half of your 100K.
Thank you for the advice. I will get a lawyer. Do you know how much a lawyer will charge for this type of advice/work?
Quote:
On 2003-08-21 12:01, JohnMerchant wrote:
A "friendly" deal...knowing how often these deals go sour, when the relationship sours, I'd sure advise you have your lawyer write it up.
Just like any other business agreement, so everything is in writing, nothing left out.
Just as in the best planned marriages these days. With a pre-nuptial agreement so there's no doubt, no questions about who owns what, how it's paid, who gets rent & income, etc.
The more carefully you plan all this now, the easier it will be on you both if/when you do break up.