How Co-Buying a Home Helps with Affordability Today

How Co-Buying a Home Helps with Affordability Today

Purchasing a home in today's market can be challenging, with rising home prices and mortgage rates impacting budgets. If you're feeling uncertain, co-buying might be a practical solution to help you achieve homeownership. As Freddie Mac explains:

“If you are an aspiring homeowner, buying a home with your family or friends could be an option.”

Before deciding if co-buying is the right choice, there are important factors to consider. Let’s take a closer look at why this approach is becoming increasingly popular among buyers and whether it could be a good option for you.

What Is Co-Buying?

Co-buying involves purchasing a home with someone, such as a friend, sibling, or even a group of people. With rising home prices and higher mortgage rates, this approach is becoming more common. A survey by JW Surety Bonds reveals that nearly 15% of Americans have already co-purchased a home, while another 48% would consider it.

Why Consider Co-Buying?

The JW Surety Bonds survey also explored the benefits of co-buying a home. Among the top advantages cited were shared expenses, increased purchasing power, and the ability to afford a larger or better property (see graph below):

• Sharing Costs (67%): Co-buying can make homeownership more attainable by dividing major expenses like the down payment and monthly mortgage payments, easing the financial burden.
• Affording a Better Home (56%): Combining financial resources can allow buyers to secure a larger or more desirable home, such as one with extra bedrooms, a spacious yard, or a prime location.
• Investment Opportunity (54%): Co-buying can serve as a strategic investment, especially if the home is used as a rental property to generate passive income.
• Sharing Responsibilities (48%): Maintenance and upkeep are part of owning a home, but with co-buying, these tasks can be shared, reducing the workload for everyone involved.

Other Co-Buying Considerations

Co-buying a home requires a higher level of trust and communication than a traditional purchase. You’ll need to agree on everything from finances to how you’ll use and maintain the property. It’s essential to have a clear plan and a legal agreement in place to protect everyone involved.

“Buying a house with a friend or multiple friends might be a great way for you to achieve homeownership, but it’s not a decision you should make lightly. Before diving in, make sure you understand the financial and logistical hurdles you’ll face, as well as the human and emotional elements that might affect the purchase or, more importantly, your relationship.”

In essence, it’s crucial to align with your co-buyer on key details such as dividing costs, managing responsibilities, and determining the course of action if one of you decides to sell their share down the line. Consulting an expert can provide valuable guidance, making these discussions smoother and more straightforward.

Bottom Line

If affordability challenges are holding you back, co-buying might be a practical way to achieve your homeownership goals. However, thoughtful planning and clear communication with all parties involved are key. Let’s connect to explore whether co-buying is the right option for you and help you take the next steps confidently.