Buying a Home with a Roommate in Mind
Purchasing a home is one of the largest investments you’ll make in your life, but one that can certainly pay off in big ways. While many people make the leap into homeownership as a way to become more independent, there are others who buy a home and seek out a roommate to ease the financial burden of monthly payments.
Benefits of a roommate
Not sure if having a roommate is right for you? Well, it’s certainly not for everyone — but there are some convincing reasons why it might be a good idea for you as a homeowner.
Your mortgage
Arguably the biggest reason to invite a roommate into your home is for the financial benefit. After all, who wouldn’t love to have someone else contribute to his or her monthly mortgage payment? While it’s critical that you can afford your mortgage without the help of a roommate, having one will allow you to reduce the amount out of your pocket each month – which means you can save for other financial goals and endeavors, such as: - Paying down your mortgage more quickly and gaining equity - Maxing out your 401k - Investment opportunities - Paying off other loans or debts - Putting money into a college fund for later use (either for you or your future children)
Your utilities
Often, utility bills can catch homeowners by surprise, especially when they first move into their new home. While you know exactly what your mortgage payment will be every month, utilities can vary widely depending on the time of year and location. Having a roommate means having someone you can share the utility bill responsibility with each month.
Help around the house
Ideally, your roommate will be neat and assist you in keeping your home clean. That’s a big perk of having someone live with you — an extra set of hands to help with chores, maintenance, and other home projects you have going on. Not to mention, you’d have a live-in house sitter when you’re out of town. Cost of maintenance, upkeep, and repairs could also be something your roommate helps with physically and financially, making unexpected homeownership costs and work less of a burden.
Additional considerations
If the roommate option is something you’re considering, you’ll want to give the scenario some serious thought — even before you actually buy a home. After all, the ideal home for you might look different if you’re planning to have someone living with you than it would if you would be living alone.
Space
You’ll want to ensure there’s enough space for you and your roommate to live comfortably — including multiple bathrooms and a kitchen and living room large enough for sharing — unless you find a home that boasts separate living areas.
Ensuring there’s enough room for each of you can go a long way toward fostering a positive roommate experience.
Home cost
Whether you have a roommate or not, you’ll want to make sure the home you buy is affordable for you on your own. You never want to find yourself in a situation where you’re reliant on your roommate in order to make your monthly mortgage payment. After all, your name is the one on the loan, which makes you the responsible party even if your roommate decides it’s time to move on. If you’re looking to have the mortgage under your name, then lenders will be looking at your income specifically. Make sure to look at what you can truly afford on your own, specifically what easily fits in your monthly budget and also what would be a stretch for you. This way, a roommate would truly be an additional bonus, and the sky is the limit with the extra money you’re able to save by choosing to live with someone who’s helping with payments.
Bills
In addition to your roommate’s portion of the mortgage payment, you’ll most likely split costs for shared utilities such as electricity, water, cable/internet, and trash pickup. It’s important to establish these costs upfront with your potential roommate when you’re discussing rental fees to ensure you’re both on the same page. If you want to keep it straightforward, you could consider adding a flat fee to the monthly rent due to cover the roommate’s portion of utilities.
Rules and renter terms
Inviting someone to live in your home is a big deal, whether he or she is a close friend or a stranger. In either scenario, you’ll find that setting some ground rules and expectations before move-in can keep things amicable between you two. Don’t forget to discuss things like quiet hours, visitors, shared items and responsibilities, cleanliness, pets, and more. Establishing your perspective on these topics upfront should make for an overall positive experience sharing your home with someone else.
If you enter a rental relationship with a roommate, it’s important to note that you will be the landlord, and your roommate is your tenant. It’s always a good idea to seek legal counsel to help you draft a lease, and establish legal boundaries for the relationship. Inviting a roommate to live in your home can help you save big and achieve your financial goals at a much quicker pace. However, it’s not for everyone, so make sure you consider all sides before buying a home fit for a roommate.