Since the beginning of the housing recovery in 2012, home prices have raced ahead at a pace far stronger than income gains.
That imbalance is causing more homebuyers to look for a helping hand.
Attom Data Solutions reports that on average, nearly 1 in 4 mortgages in the second quarter involved co-borrowers who were not spouses, compared with less than 1 in 5 as recently as 2015.
In many major markets, co-borrowing was even more popular.
More than 50 percent of mortgages in San Jose, California, which includes Silicon Valley, involved co-borrowers in the second quarter. In Miami, 45 percent of mortgages had co-borrowers, Seattle had 39 percent, in Portland, Oregon, nearly 30 percent of mortgages had co-borrowers and in Tampa, Florida, 26 percent.
"The market has to react to higher prices in some way," said Daren Blomquist, senior vice president at Attom Data Solutions. "During the last housing boom, the decision was to loosen lending standards. That's not happening now, so co-borrowing is one solution."
Co-borrowers can be the bank of Mom and Dad co-signing to help a child qualify for a mortgage. Or it can be two (or more) unrelated people going in together on a home. Third-party investors are another option; Unison.com, available in a dozen states and the District of Columbia, provides down payment assistance in return for a share of any gains when you sell (or buy 'em out); the typical equity share is 35 percent.
While all permutations of getting help can be a viable way to cope with today's affordability crunch, "you need to go in with eyes wide open," Blomquist said. "Think through the worse-case scenarios."
Hopefully the worse-case never comes into play, but talking through all the what ifs is a valuable process to make sure you are on the same page and have anticipated all the major issues.
Key issues to settle before you go dutch:
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