4 people on a mortgage?

[Anonymous]

Hey guys - I come to you with a hard and somewhat complicated question. 

My husband and I are desperately wanting to move back to the country closer to our family (we are currently renting 2 hours away). His sister and her husband are selling their home and have purchased a small camper which they will live in on my father in law's land until they are able to build their own home. They are looking for land to purchase now.

So we all came upon an opportunity right in the middle of where we all 4 want to be. It's a gorgeous property, 47 acres for sale with a 5 bedroom home in the middle. The home is basically studded out and would need to be finished up. The idea pitched to me was what if we all 4 bought this property, my sister in law and her husband bring their camper and end up building a home on another part of the huge 47 acres and we both then have what we want on secluded private land close to each other. 

Here's the thing, they have great credit but together make about $90k a year. My husband and I are rebuilding our credit and are both right now around 590, trying to get to 600. We make close to $140k together a year. The house and land are for sale for $375k. 

I guess there are so many questions as to, CAN we do this together? And ok say we do, how can we sell off a portion of the property to them (or deed it off) so that they still carry part of the burden of the original loan.

They are good on paying, again they have stellar credit and have no interest leaving us holding the bag. I just know my husband and I cannot afford to take on this entire loan alone so I don't know enough with mortgages to know what we could do in the future when they take out a construction loan (for their home) and eventually build and move. 

Hopefully that makes sense. Nothing has been done, we have only looked at the property but we do want to seriously consider it and just see how it could possibly be done.

[Anonymous]

Also - I checked and it is in the eligibility for a USDA loan but I'm going to assume we all 4 would far exceed the income limit??

[iv]

Can you do that? Sure.

But there's a lot of missing details...

Just how close to being complete is the house?

Does it have a CO yet? (Can it be legally lived in yet?)

How much will it cost to finish?

Would you be trying to include that cost in the loan?

Can the land actually be sub-divided later? (Some areas have restrictions, or there could be existing deed covenants.)

What part of the land would they build on?

Does it have easy access to utilities and/or good well and perc tests?

Does it have road access? If not direct road access, a right-of-way agreement needs to be made. (Think about years down the road, when you or they want to sell... or when your kids do.)

Would they be "buying you out" of part of the land, and leave you with the original loan (still in all your names)?

Or would you re-fi for your land and the house at that point?

In general - how much cash (and/or debt responsibility) would change hands, and in which direction?

Down payment? Do you have cash on hand? Do they?

If your scores are being affected by large balances on cards, would they pay that down for you, in exchange for a larger share of the property later?

Make sure that all four of you are on exactly the same page!

Put any agreement(s) in writing. Use a lawyer to draft the terms.

My biggest concerns would be:

1) The condition of the existing house, and the work required to make it livable

2) Verifying that the land can be sub-divided

3) (Awkward question, but...) How sure are you that the four of you will be on good terms for decades to come?

Good luck! It sounds like it could work out very well... just make sure it's what you all want, and that you check all the details carefully.

[me12345]

4 people on a mortgage is not a problem....

Getting a mortgage for this property is going to be a problem because of the acreage and the condition of the house.

Your only option is probably going to be a "Hard Money" lender or maybe a local Bank that does Portfolio lending, because this home is not eligible for a Fannie Mae mortgage. (Or USDA or FHA) However, both of those above options are going to require at least 20% or more down.

Thanks,