How do you buy an ownership stake in a property?
Michael JensenMortgage and Finance Guru Updated October 20, There are no simple answers to your question but there are several ways to purchase an ownership interest in a property.
We walk through the options below and address some of the pros and cons of each approach. There are several factors, such as the current value of the property and the value of the ownership interest that you want to buy, that influence which option makes the most sense for you.
Use a seller making money giving advice to purchase the ownership interest. With this option, you purchase the ownership interest from the seller directly by paying part of the purchase price up-front and the seller accepts a note for the balance of the purchase price.
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You would pay off this loan by making monthly payments to the seller based on loan terms that the two of you agree upon. In this scenario the seller must be willing to take back the note and may prefer to receive the entire proceeds from selling her or his ownership interest upfront instead of receiving the payment plus interest over several years. With this approach, you end up with two monthly payments: one payment for the existing mortgage and a second payment for your new, second mortgage.
Because the other property owner the one not selling her or his ownership interest to you would still own the property in this option to buy a stake, she or he would need to qualify for the second mortgage or home equity loan based on her or his credit score, debt-to-income ratio and other qualification factors.
Additionally, there must be sufficient equity in the property to support the combined loan-to-value CLTV ratio of both the existing mortgage and the new second mortgage.
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The table below shows home equity loan rates and fees. We recommend that you contact multiple lenders to find the best home equity loan terms.
Payments do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included.
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Click for more information on rates and product details. Obtain a new mortgage with the other property owner to buy the ownership interest. In this scenario, both you and the other owner are required to qualify for the mortgage based on your credit, financial and employment profiles. The upside to this approach is that your co-borrower may be able to use her or his current ownership interest for the down payment required to qualify for the mortgage.
The table below shows refinance rates and closing costs. We recommend that you shop multiple lenders to find the mortgage that best meets your needs.