Do you and your friends talk about buying a house together? Well, you’re not alone! Many first-time homebuyers are pooling their resources and venturing into co-ownership with their friends. This approach has allowed many first-time homebuyers to purchase a home in a market they would otherwise have been priced out of.
Can I co-buy a house with friends?
Co-buying a home with friends is becoming more common as home prices and mortgage rates remain high. In 2023, 14% of homebuyers co-bought a home with their friends and 12% co-bought with a relative, according to a Zillow housing trend report. Many co-buyers have co-borrowed a mortgage to finance their shared homeownership.
Keep in mind, that a co-borrower is not the same thing as a cosigner. A cosigner is someone who signs a loan with another borrower agreeing to repay the mortgage if the primary borrower cannot repay it. A co-borrower is someone who shares the ownership and responsibility of repaying a mortgage with any other borrower(s) also listed in the home loan. The number of people allowed on a co-borrower mortgage depends on your lender and loan type. To get a better understanding of mortgages available to you and your friends, it can help to speak with a PrimeLending mortgage expert.
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Benefits of co-owning property
The main benefit of co-owning property is that it can make the homebuying process, and homeownership in general more affordable. There is a myriad of other benefits to shared homeownership, especially if it is your starter home, which includes:
- Start building equity sooner rather than waiting to be able to afford to buy on your own.
- Share the cost of utilities, maintenance, repairs, homeowners insurance and taxes.
- May be able to afford a larger home or a home in a more preferrable area.
What to consider before co-buying with friends
As with any big financial decision, you need to think through what sharing homeownership (and a mortgage) with friends will look like. First, consider how much each of you can realistically afford and how you will equitably split the financial responsibility of your co-borrower mortgage. Then, think about how shared homeownership will impact your friendships like splitting house hold duties, bills, etc. Finally, consider your long term plans and discuss what you will do if someone decides to move or everyone eventually decides to sell.
