How to Help Your Kids Buy a Home

If you want to help you children purchase their first home, there are several ways to approach the adventure. There are many reasons that parents choose to help their kids with a home purchase. Young buyers, often fresh out of college or grad school, frequently lack credit history, have little or no savings, or are strapped with heavy student loan debt.

One option is to wait several years and let the young ones build up their credit rating and savings accounts. But it can be a wise choice, especially in a “friendly” real estate market, to take advantage of a deal while the getting is good. That’s why so many parents opt to help their children with a home purchase. If that’s the way you want to go, here are some key things to keep in mind.

  • According to the popular financial blog, Credit.com, people under the age of 35 who buy homes are a rarity on the real estate scene these days.
  • The most common way for parents to help their children is with down payment money, either in the form of a low-interest loan or a gift.
  • An even bigger commitment on the part of the parents involves co-signing. Remember that when you co-sign on a loan, you put your own credit rating at risk should your children default or miss multiple payments.
  • Buy a house for cash and either gift it to your children or set up any type of payment arrangement that works for both of you.
  • You can also act as “the bank” for your children if you have the financial resources to do so. In cases like these, the parents buy the house for cash, then sell it to their children under more favorable conditions than a bank would.

Buying a home is a serious financial move. Helping your daughters, sons and their spouses acquire a home early in their financial lives is almost always a wise move, provided both you and they understand the details of the agreement.

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