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While this year’s market has presented some challenges with home prices and interest rates, some homebuyers are getting creative. Many young and first-time aspiring homebuyers have found creative ways to find homes they need.
According to a Zillow and Opendoor, co-buying a home with a person other than a romantic partner is increasingly common in 2023 and 2024. In Opendoor’s 2024 First-Time Homebuyer Report, 11% of their 1,000 surveyed buyers purchased with a friend in 2023. Zillow had similar findings. Based on their data, 14% of all buyers co-bought a home with a platonic friend and another 12% bought with a relative other than their spouse or partner.
A mortgage and homeownership can put a large strain on a single income. Lenders use a metric called a debt-to-income ratio, or DTI, to help determine your ability to make monthly payments. Your DTI is determined by adding up your monthly debt and dividing it by your gross monthly income. When purchasing with another person, your lender will calculate your DTI using both sets of income and debts. This may lead to a better interest rate and lower monthly payments.
As your finances are combined, you may be able to afford more home and a larger down payment. Instead of relying solely on your own savings, your co-buying partner will be able to chip in for mortgage and homeownership costs.
Whether you’re sharing the same unit, or your friend is right next door, it’s nice to know that another person is going through the same life stage as you. Instead of going through the mortgage and homeownership process by yourself, you have someone you can trust right by your side to help you manage stress and stay positive.
While making a big purchase with a platonic friend can be exciting, it may also put a professional pressure on a very personal relationship. 49% of homebuyers who co-bought a home argued with the other owners about what home to buy, based on Opendoor research. They also found that on average, co-buyers had four arguments over the course of their home search process. Open communication to discuss finances and responsibilities in detail can help to deter resentment.
If a person must move out due to a new life stage, it can be difficult to achieve. If you’re both listed on the mortgage, you may have to go through a refinance to ensure the home is only under one person’s name.
If a person who is listed on the title and mortgage has financial difficulties or loses their job, it will affect all people involved. When one person falls behind on their monthly payments, the other owners involved will have to help make up the difference.
Regardless of how you purchase your home, be sure you have a mortgage lender who cares in your corner! Our experienced and diligent Loan Originators are ready to help you through every step of the process. Contact us today to get started!
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.
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