Learn how you can afford a home with the help of a ‘co-borrower’.
With today’s housing market, it is no surprise that buying a home is difficult. The current housing market consists of tight inventories, combine that with high demands, it’s a disastrous combination.
Despite that fact, there are some ways to buy a home within a reasonable price. One of these ways is to take on co-borrowers. Having co-borrowers help you gain an edge.
According to Attom Data, in the second quarter, about 22.8% of mortgage purchase applications involved a co-borrower. Attom Data is a well-known real estate information provider.
Reports say that there are dozens of programs that act as a co-borrower by offering down payment. In return, co-borrowers share equity in the home.
There are a few private companies that offers to be a co-borrower. However, there are also other ways you can enter a co-borrowing situation. Your family members can be co-borrowers as well.
Attom Data’s records shows that home buyers with a co-borrower are buying smaller but more expensive properties. These buyers and co-borrowers are doing it with low interest rates and more money down. In result, this allows them to avoid paying mortgage insurance.
In the table below, you can find out more information. This table comes from records and facts for which Attom Data could provide all the data for each field noted.
| Co-borrowers | Other borrowers | All borrowers | |
|---|---|---|---|
| Average Market Price | $625,801 | $525,834 | $551,085 |
| Average Loan Amount | $491,367 | $444,074 | $456,023 |
| Average Loan to Value | 79% | 84% | 83% |
| Average Interest Rate | 4.11% | 4.28% | 4.23% |
| Average Square Footage | 2156 | 2223 | 2206 |
In a recent statement, Attom Vice President Daren Blomquist said, “My takeaway is that co-borrowers are buying in more expensive markets but having to put more down to compete in those markets,”
He elaborated further by saying,
“The more money down along with a co-signer who may have better credit is helping these co-borrowers secure a lower interest rate, but the homes they are buying tend to be smaller, an indication these skew toward first time home buyers.”
According to reports, the median down payment for first-time home buyers is 6%. This percentage is among all types of borrowers and properties across the nation. On the other hands, among all borrowers, the median down payment for first-time home buyers is 10%.
Have you tried co-borrowing to buy a property? Share your experience with us in the comment section below.
Source: Realtor.com