With home prices and mortgage rates appealingly low and no-money-down loans nowhere to be found, more young adults are turning to family to get into their 1st home.
Over the past year, 36% of 1st time buyers got help with their down payment from family or friends, typically parents, according to the National Association of Realtors, up from 28% the previous year.
If you want to give your child a leg up on a home purchase, 1st make sure you're on track to hit your retirement goals. Then you'll need to figure out whether you want to give them the money, extend a loan or cosign the mortgage. Use the guidelines below to help you decide.
How to do it: today's tighter lending rules mean your child must be able to prove they have the funds in the bank for at least 90 days before they apply for a loan. If you don't want to hand over the cash that early, be prepared to show that you've had the money in your account for at least 60 days.
How to do it: if your child needs only a few thousand dollars, your estate planning attorney can draw up a personal-loan agreement. For a larger loan that would allow your child to deduct the interest, get a formal mortgage.
No matter how you end up helping your child, keep in mind that your check doesn't entitle you to pop by their abode unannounced whenever you feel like it...
references: cnnmoney.com, amanda gengler, morguefile.com
Comments(5)