For many people living in regions with a robust housing market, the dream of owning the property that they want seems simply out of reach. They are instead forced to either buy property in a location outside of their desired area or continue to pour money into rental payments. Determined individuals in these situations have taken matters into their hands and have sought creative lending options such as a Tenancy in Common loan to meet their housing goals.
At California Mortgage Advisors Inc., we understand that unique financial situations require unique financial solutions. Unlike some lenders, we fully appreciate the unique lengths that Californians are driven to find satisfaction with their home ownership situation. Our Mortgage Advisors are available at (800) 927-6560 to answer questions regarding a Tenants in Common loan.
What is a Tenants in Common Loan?
A TIC loan is an unusual and often confusing type of loan. Essentially, a TIC loan allows multiple borrowers to pool their resources and finances to purchase a large property, such as a duplex or an apartment building, where they all then live. Each borrower owns a predetermined percentage of the property and an equivalent level of liability with regards to the loan.
The main issue with a TIC loan, when compared to other similar types of loans, is that legally speaking the property in question is a single, undivided unit. This means that when borrowers purchase an apartment building, they are not obtaining a loan to buy a single apartment in the building; they are obtaining a loan with which to purchase a specific percentage of the entire apartment building. This means that the right of a particular TIC owner to use a particular unit or apartment comes not from the loan or the deed but from a contractual agreement (often called a Tenancy in Common Agreement) that all the co-owners sign. A CMA Mortgage Advisor can help applicants understand the nuances of a TIC and a formal contractual agreement.
The main benefit of this type of loan is that it allows borrowers to invest in real estate in an area where the personal financial barrier for entry would normally prove too high. That is not to say that obtaining a TIC loan does not require significant financial stability or demonstrable financial benchmarks. This is considered an extremely high-risk loan based on the multi-borrower nature of the loan. CMA Mortgage Advisors will carefully review each applicant’s current financial status to determine the specific type of loan structure that works best for all parties involved.
In addition to providing financial flexibility, TIC loans also afford borrowers a measure of flexibility when it comes to dealing with state and local laws that restrict and manage the division of property. Basically laws and regulations that would stop a property from being legally divided into condominiums does not prevent tenancy in common. However, regulations vary widely on a state and local level. A CMA Mortgage Advisor can help borrowers understand if a TIC loan is the best option from a legal perspective based on their individual geographic situation.
Obtaining a TIC loan is not a simple process. It requires strict planning, communication, and research into local laws and housing regulations. It also requires applicants meet stricter than normal financial guidelines. Finally, the application and approval process also takes longer than a traditional loan based on data processing volume. However, at CMA, our Mortgage Advisors are undeterred by loan complexity or hard work. They are willing to do whatever it takes to connect borrowers with their desired loan type.
At California Mortgage Advisors Inc., we genuinely believe that we offer our customers the best mortgages in the industry. We have offered a variety of loans since 1993, which means our Mortgage Advisors have successfully matched tens of thousands of borrowers with loans tailored to meet their needs and unique financial situations. Our Mortgage Advisors are available at (800) 927-6560 to answer your questions or click here to apply online.