It has been more and more common to see the millennial generation putting together their income to afford a house. Renting has become too much of a hassle and with today’s low-interest rates, renters are starting to realize how much they may be missing out on.
Millennials are known for being a part of a generation that is riddled with student loan debt and who started entering the workforce during an unfortunate downturn.
Despite claims of self-sabotaging their own financial stability by their ineptitude to maintain a savings, the millennial generation is phasing out of their young adult stage and are now older and wiser.
Here, we dive a bit further into why millennials are cash-strapped when it comes to housing and how co-buying can be the perfect solution.
According to a report from Data for Progress, 52 percent of people under the age of 45 have lost a job, been put on leave, or had their hours reduced due to the pandemic, compared with 26 percent of people over the age of 45.
On top of this, Forbes reports that college tuition has been steadily increasing 8 times faster than wages. It is no question that tuition for higher education is nowhere near the same dollar amount as it was 10 years ago.
The debt-to-income ratio seen with millennials makes it difficult to qualify for a home mortgage.
However, that does not mean all hope is lost.
Many millennials assume an untraditional lifestyle in the sense that many may be single mothers or fathers, unmarried, or simply do not care for a domestic partnership.
And we all know buying your dream home on a single income is no piece of cake. Although it is certainly not impossible now with the current market. Read more about how buying a starter home may be a good option for you.
Additionally, we discussed last week how home prices have been rising, despite the pandemic.
So, when it comes to combining income with a couple of friends to qualify for a mortgage, it may seem like this is a millennial’s best choice.
Why go this route instead of renting? Being a homeowner allows you to build equity, increase your credit, have a stable residence, and save money.
Questions to address
With that all being said, buying a home with friends is not the same as splitting the bill for takeout or going in on a cruise to the Bahamas.
Co-buying also equates to co-ownership. It is recommended that the property is purchased with all co-buyers being labeled as joint tenants. That way everyone has their fair share and legal decisions can not be made without everyone’s approval. If one owner were to die, their share would go to the other owners and not to the heirs of the deceased individual.
These are the questions you should all ask before embarking on this journey.
- Whose name(s) goes on the title?
- Who is responsible for collecting and making the mortgage payments?
- Who will oversee maintenance and repairs?
- What are the rules for pets, houseguests, and other visitors?
- How will decorating and furniture-buying decisions be made?
The good news is these questions are not much different than the ones you would ask when renting with roommates.
This route may not be for everyone, but it is a good option for those who want to take advantage of today’s rates. It seems to be proving effective with millennial co-buyers around the country!