Do Your Children Need Financial Help With A Home Purchase?

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Services for Real Estate Pros with RE/MAX Executive Realty 104763

Remember when you bought your first home?  It was such a wonderful moment.  Of  course, prices in the mid ‘70’s, when we bought ours, were fantastic compared to now.  We needed some help with the down- payment, and my parents loaned us the money.  We repaid every penny.

Today, it’s a magic act for young people to get started with homeownership.  The costs are astronomical.  More are renting and missing the opportunity to take advantage of the low housing prices and low interest rates. 

Some parents are not willing to participate in helping their children financially, and that’s a personal decision.  There are ways to accomplish the goal of helping them achieve homeownership.  There are second mortgages that can be recorded after the closing to protect your investment. 

If the home is sold, your money is paid in full plus interest.  If the home goes to foreclosure, you have a tax write off.  It’s worked for me and my children.  Have you thought about helping them take advantage of the incredible interest rates and housing prices?  Everyone can make a score.

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Barbara Todaro

Marketing Agent for The Todaro Team

308 W. Central St...suite E

Franklin, MA 02038

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Dagny Eason 09/24/2011 02:15 PM
  2. Yvonne Burdette-Van Camp 09/24/2011 02:22 PM
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helping our children attain homeownership

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Rainer
233,428
Mike Yeo
3:16 team REALTY - Frisco, TX

If a parent can help, it is a true blessing to the kids. If the kids had to ask their parents to help with a down payment then they maybe they ought to look at their finances.

Sep 24, 2011 05:05 PM #20
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2,556,188
Ed Silva
RE/MAX Professionals, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

My help was with trusts when they were born and making regular deposits until they turned 21.Two of them put large down payments on their houses when they bought, and the other one has the trust just appreciating, somewhat

Sep 24, 2011 11:44 PM #21
Rainer
124,411
Melissa Ostrom & Melville Capps Newton MA - The Mel and Mel Team
(617) 388-3151 | Century 21 Commonwealth - Newton, MA
Barbara, using a second mortgage instead of a gift makes a lot of sense. It reinforces that one's children are making their own financial commitment. Also, it makes it more complicated for them to take out a HELOC and use their house as an ATM, which is a good thing.

Melville

 

Sep 25, 2011 12:25 AM #22
Rainmaker
4,949,617
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

thank you all for commenting....this method of helping children is my method of choice.....as melville stated, there are some controls....if it's a gift, it may be a temptation they can't control to pull equity out.....the second mortgage makes it a secure investment and a long term investment without touching the equity....

Sep 25, 2011 12:30 AM #23
Rainmaker
281,030
Gail C. Harris
Resource Network, LLC SFR, AHWD, ACRE, SMAR Board Director - Chesapeake Beach, MD
Reach the BEACH with Gail C. Harris (cell: 703.868

I remember when I purchsed my first home I was making $5.00/hour!  I had two jobs  though.  My parents gave me some money to buy a home, and I paid them back in one year.  Interest rates are low, homeownership is a good thing, however, only 1 of the 3 step children I have think so!  With interest rates so low, and home prices at unbelievably low rates  I would hope the other two decide to buy something. :)

Sep 25, 2011 12:45 AM #24
Rainmaker
136,088
Sherri Berry
Reliant Realty, Murfreesboro - Murfreesboro, TN
Murfreesboro TN Homes & Real Estate

Great post Barbara!  My daughter got help from us and it was the best money we ever spent!  It set her on the road to financial security and being independent.  

Sep 25, 2011 01:08 AM #25
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Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

What a great way to push your kids into being more responsible when they assume the role of homeowner.

The sad part in some families. .the parents could hardly afford their own homes now. . and they are the ones  that need the help!

Sep 25, 2011 01:22 AM #26
Rainmaker
327,234
Susan Morrison
RE/MAX Executive Realty - Franklin, MA

I have many years before I have to think about that.  College tuition is next on the list, but when the time is here, I will help them buy a property and your thoughts are good ones.

Sep 25, 2011 03:16 AM #27
Rainmaker
4,949,617
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

I think we all agree that the most reasonable way to start young people with homeownership today is to participate in their financing with a second mortgage for whatever part of the second mortgage is given.  It's doing them a great justice and it will control their desire to use the equity as it's gained.  Even if they do not give you payments, the mortgage will be paid in full, including interest, if they ever sell or want to refinance. 

Sep 25, 2011 03:20 AM #28
Rainmaker
316,101
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Like you, bith my kids had their first home in their twenties. And both had downpayment help from us. I think it helped them in other areas too, since their housing was secure and for the most part permanent. Nice post!

Sep 25, 2011 03:57 AM #29
Rainmaker
885,945
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

Parents with the means are a far better option than government red tape and grants. Excellent suggestion Barbara. Whether it is an outright gift or a mortgage it is worth devoting the resources. 

Sep 25, 2011 04:53 AM #30
Rainer
21,055
Team Lesti
Windermere Napa Valley Properties - Napa, CA
Napa Valley Real Estate Experts

I try and tell everyone this, but there are those that are still skeptical. Thanks for the post!

Sep 25, 2011 05:01 AM #31
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Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Barbara  Yes my parent helped me but like you said the prices were much different back then . I did help both my children buy their homes . Helping your children buy their home is  a very rewarding experience .Both for you and them.

Sep 25, 2011 05:08 AM #32
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1,634,357
Alan May
Coldwell Banker Residential - Evanston, IL
Helping you find your way home.

... and I believe that they are allowed to receive a small amount (somewhere around $13,000 per year... if filing jointly.... $23,000 if filing independently... but check with your tax professional), tax free.  Larger amounts can have tax ramifications.

Sep 25, 2011 05:58 AM #33
Rainer
205,520
Mark Delgado
houses for rent, Solano County & Glen Cove - Benicia, CA
Benicia and Vallejo, Property Management, rental h
I'll add my vote of support to the many that have already agreed with your blog. If families can find the resources to help their own members than all of society benefits.
Sep 25, 2011 06:46 AM #34
Anonymous
Anonymous

To each is own  but I beg to differ.....  My parents had the means to pay for college, buy me a house and push me into a nice life.  They chose to let me pay for college, and pay for my house.  I am so thankful they showed me what it was like to work for a goal.  I intend to do the same for my child.  

There is so much entitlement these days and children are so spoiled.  

Sep 25, 2011 10:53 AM #35
Rainmaker
4,949,617
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Anonymous commenter....thank you for sharing your opinion with everyone.....everyone has a thought on this topic.....I have to differ with you...because a child is helped by parents does not mean that child is spoiled....I never paid for a penny of my degree; was given a new car for graduation and a down payment on a home when I was in my 20's.....the down payment was not a second mortgage but was paid back; the car lasted many years; and the education was put to good use.....I was not spoiled.....I was very responsible and still am.....I work every day and have a team that I take full responsibility for....without all of that help, I may not have had these opportunities....I was very fortunate, not spoiled.

Sep 25, 2011 11:04 AM #36
Rainmaker
732,603
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Here in Manhattan New York, many of our buyers are parents buying for children who either works or go to school here in NYC. Many parents from out of town buy the condo all cash or with large down payment, the children or young adult children are very fortunate to have their parents to help them become first time home owners in my opinion. These young adult children work very hard in either school or work in this concrete jungle.

Sep 25, 2011 05:53 PM #37
Rainer
284,418
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Barbara a great blog on something that can be life changing for the young buyers.  As Belinda (#11) points out, they can save money every month over renting, and then have a nice bonus when they file their taxes.

Sep 26, 2011 07:58 AM #38
Rainmaker
4,949,617
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Eileen.....life in New York City is like live no where else, so I've heard....

steven.....there are many points that are beneficial to young people....they need it today...

Sep 26, 2011 08:05 AM #39
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