The Pros And Cons Of Co-Buying

Co-buying has gained popularity as Americans search for ways to afford a home. But for all its benefits, it also comes at a cost.

A new survey from LendingTree found that 29% of Americans would consider co-buying a home with someone other than a spouse or significant other. That number varies by generation, broken down into 36% of Millennials, 25% of Gen Xers, and 13% of baby boomers.

Most of those open to co-buying said they would prefer to buy with a family member who wasn’t their spouse (63%), while a good friend or current roommate would suit just over half (57%).

Six-figure earners are the most likely income group to consider co-buying (38%), while those making between $35,000 and $49,999 (24%) are the least likely. Men (34%) are more likely to consider co-buying than women (23%).

“While married couples have the advantage of being able to pool their incomes and resources together to afford a home in today’s expensive housing market, not everyone is so lucky,” LendingTree senior economist Jacob Channel said. “Owing to this, buying a home may be out of reach for many unless they’re willing to co-buy with a friend or family member.”

With the costs of homeownership now firmly over the 30% cost-burdened threshold and interest rates stuck near 7%, co-buying may be the only way some can afford a house.

For those who wouldn’t consider co-buying, major objections included legal and financial protections and the desire for financial independence.

These are serious concerns that those who would consider co-buying need to take into account.

Even if you trust your co-buyer, financial disasters could arise that leave you on the hook for debt you didn’t anticipate. Missed payments due to your housemate could hurt your credit score, too.

Plus, financial hardship could lead to rocky periods between you and your co-owner. Unexpected problems can lead to a deterioration of trust and, in the worst case, a breakdown of your relationship. Experts recommend having frank conversations about finances, future plans, and the type of living situation you prefer with anyone you might consider living with. Airing dirty laundry early can prevent problems later.

The young generations are the most optimistic about their chances of homeownership with or without a co-buyer. More than three-quarters of Zoomers believe that one day they will own a home without a co-buyer. For those looking forward to a sharing-free future, co-buying a home now may help boost their financial health moving forward.

“Optimism isn’t bad, but it won’t buy you a house all on its own. With that in mind, those who want to buy a home someday should plan carefully and start doing things like saving, paying down other debts, and working on boosting their credit scores as soon as possible,” Channel said. 

“The more time you give yourself to prepare your finances for buying a home, the better off you’ll likely be.”

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