When you think of co-borrowing, you may be thinking of asking your parents or someone you trust to co-sign on your home. Co-signing on anything comes with responsibility if one of the borrowers stops making payments the other borrower will be responsible. There’s a relatively new co-borrowing trend gaining popularity that’s a new take on enlisting a family member to co-sign. The new trend of co-borrowing is where a buyer(s) requests a co-borrower from a company to help with the down payment on the home and in return, the company gets a share of the home’s equity built during the span you own the home. This is also called home-equity sharing.
It sounds like a lucrative deal to some, especially if it gets a buyer away from having to include private mortgage insurance (PMI) on their monthly mortgage payments. Depending on the price of the home, PMI can add hundreds of dollars to a monthly payment and can make a home that seems within budget out of reach. Realtor.com has reported its own findings on the growth of buyers who choose to co-borrow over waiting to purchase their home. Are you okay with not owning 100% of your home?