According National Association of Realtors (NAR), one-third of first-time home buyers turn to family and friends when purchasing a home last year. Many of these buyers are receiving a gift. If the financial aid received is documented as a gift in the loan process, the money is not required to be given back to the person who gave the gift. Another way to assist a first-time home buyer is setting up a Co-Ownership and Shared Equity Arrangement. This type of arrangement provides tax advantages and requires a written contract signed by all parties defining the terms of the agreement. This should be done in order to legally take advantage of IRS deductions. Using family to help with down payment is common among millennial buyers and unmarried couples. Other first-time home buyers are using savings that were originally targeted for retirement, etc. Receiving financial help from family or friends has advantages for first-time buyers that may allow them to bypass renting. Many young people are choosing to live at home and then transition into homeownership. According to NAR, nearly one-fourth of these buyers move from their friends or family house directly into homeownership. Some of the reasons given why potential young buyers like these living arrangements: it allows them to save for a down payment without making high rent payments, pay down student debt, improve their debt-to-income ratio, and avoids coordinating lease agreements with purchase home agreements. This means timing when rental lease ends with purchase of a home.
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