Is Co-Buying Right For You?

For some buyers, purchasing a home independently may be out of reach. Co-buying is an alternative approach to homeownership where two or more individuals purchase the property together and take on a joint mortgage. Get to know the benefits and drawbacks of co-buying before deciding whether it’s right for you.

How Does Co-Buying Work? 

Just like a traditional home purchase, lenders use the buyers’ debt-to-income ratios and credit scores to determine their mortgage eligibility and formulate the terms of their loan. The lender will use the lowest median credit score to determine whether the co-buyers qualify. Before you purchase with a co-buyer, work with a real estate attorney to flesh out the details of the agreement including the distribution of shares, the responsibility of each party for the down payment and subsequent mortgage payments, and the home’s title. There are two main options for taking title to a home with a co-buyer.

Tenancy in Common (TIC)

  • When co-buyers hold a title as tenants in common, shares of the property can be divided equally or unequally. You and a co-buyer can decide to split ownership to reflect the amount invested. However, even if these amounts are unequal, no one individual may claim sole ownership of the property. If a co-buyer dies, their ownership passes along to their designated heir. With Tenancy in Common, a co-owner may sell their shares of the property at any time, without the need for approval from other co-owners.

Joint Tenancy

  • Joint Tenancy—or Joint Tenancy with Right of Survivorship (JTWROS)—requires that all co-buyers hold an equal interest in the property and that they all come into ownership through the same title at the same time. If one co-owner dies, ownership passes to the other co-owner—this is known as Right of Survivorship. Unlike Tenancy in Common, co-owners must receive approval before selling any property shares.

Pros and Cons of Co-Buying

Pros of Co-Buying

For those who don’t have the buying power to purchase a home on their own, co-buying presents an opportunity to combine assets and enter the market. Since lenders will be factoring in both of your incomes, you and your co-buyer will increase your chances of being approved for a mortgage and securing a low interest rate. Both of you will build equity over time as you pay back your joint mortgage. Even after the down payment and mortgage payments, there are a handful of costs that come with being a homeowner. Co-buying allows you to split these costs, saving money on bills, utilities, maintenance costs, and the like.

Cons of Co-Buying

Co-buying a home means you are relinquishing some control over the homeownership costs. At the end of the day, you can’t control your co-buyer’s finances. If a sudden life change leaves them financially unstable, the burden will fall on your shoulders, and you’ll have to make up the difference. Similarly, your credit score could take a hit if your co-buyer is unable to make their mortgage payments, even if you’ve consistently made yours. 

 

Before entering a co-buying agreement, it’s important that you and your co-buyer are on the same page about the terms of ownership and your expectations as joint homeowners. Working closely together will help maintain the health of your finances, and most importantly, your relationship.

For more information on purchasing a home, visit the buying section on our blog:

Blog – Buying

To begin your home buying journey, connect with an experienced Windermere Real Estate agent on our website by clicking on the button below. 

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Ways to Save Money by Going Green

Contrary to popular belief, going green does not have to be hard or cost money, in fact it can even save you money.  There are many small things that you and your family can do within your home to save money while reducing landfill waste and the use of natural resources. Discover a few ways to go green and save some money by choosing a green home.

 

Compost Bin

Composting is free and can provide you with rich soil to garden with. You will never have to buy soil and can easily grow plants and vegetables.  To create your own bin, get a large trashcan with a locking lid, then drill about 25 holes all around the bin and attach the bin to small platform (allows it to drain).  Once you start putting approved items in the bin go outside and roll it around in the grass every few days.

 

Energy Efficient Light Bulbs

You can save approximately $75 dollars a year by replacing your traditional incandescent with energy efficient light bulbs.  On average energy efficient light bulbs typically use way less energy and can last much longer, not needing to be replaced as much.

 

Laundry

There are quite a few options to save money and energy when it comes to laundry.  Here are a few: wait till you have a full load of laundry to wash, line dry your clothes, wash your clothes in cold water and when it comes time to get a new washer and dryer buy an energy efficient one.

 

Weather-Strip & Caulk

One of the main ways we use a lot of energy, especially in hot and cold climates, is through air-conditioning and heating. One way to reduce the use of heating and air-conditioning is to properly weather strip and caulk all windows and doors keeping your home cool and warm when needed.

 

Reuse and Reduce

Use items more than once when you can to avoid throwing them out; this might mean buying quantity over quality.  Another way is to join The Freecycle Network or Buy Nothing group on Facebook you can swap used goods with neighbors for free and also keeping more waste out of landfills.

 

DIY Cleaning

Start making your own cleaning products.  Not only can you customize, make them eco-friendlier but you will also save money buying products.  On average, most DIY cleaners cost less than a $1 to make per bottle compared to $5-$15 per store bought bottle.

 

Unplug & Turn Off

Put all your major electronics on a power strip and shut off when they are not in use.  Even if your electronics are shut off, they still will continue to draw electricity thought out the day.  Another tip is to make sure you unplug your cellphone when completely charged and always power everything down while not in use to save on battery life.

 

Toilet

There is an extremely easy way to make your toilet a low flow toilet.  Simply add a brick, wrapped in a waterproof bag or take a plastic water bottle and fill it with sand putting it into your tank.  This will reduce the amount of water with every flush. Once you are ready for a new toilet purchase a low-flush toilet.

 

Shower

Change up your shower head with an energy-efficient shower head that will use half the amount of water.  These shower heads are low flow but will significantly cut your water bill down.  Another option is to install a tap aerator which will also cut down water usage without changing the water pressure.

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