How to Help Your Adult Children Buy a Home

With student debt looming and career paths constantly changing, the financial situation for a lot of young adults is tough. If your kids are in their 20s or 30s and still haven’t purchased a home, maybe you would like to help them. For those who can’t afford to give their adult children the entire cost of a home, there are options available to assist them financially in the home-buying process.

Let Them Live with You...Temporarily

If your children are trying to save up their paychecks for a down payment on a home, but the cost of rent and utilities are too high for any legitimate savings, invite them back home temporarily. These days, it’s common to cultivate a multigenerational household while adults are looking for a place to move. This can relieve their financial burdens and significantly help them boost their savings quickly.

Help them Research the Process

Offer to help them locate trustworthy experts and attend homebuyer education programs with them. Home-buying may have changed since you purchased a home and there are always new programs to learn about. Show them they’re not alone and support whatever feelings they may be having – if they’re overwhelmed, confused, or feeling badly about the process.

Loan Them Money

If you’re financially able, you can loan your child money for a down payment, closing costs and other home-buying fees. Be sure to establish terms and conditions, as well as expectations for repayment and interest. The IRS requires that you charge at least the applicable federal rate, or AFR, if this is not a gift. Have legal documents drawn up as needed.

Gift a Down Payment

If instead of a loan, you choose to give them the money with no repayment expectations, you can give the gift of a down payment. To do so, write a mortgage gift letter for them to submit with their application stating that they do not have to pay you back. This will increase their chances of being approved for a mortgage.

Co-Sign or Co-Borrow a Loan

If your child has questionable credit history or is overrun with debt, you can apply for the mortgage with them as a co-borrower or co-signer. This can increase their chances for being approved for a mortgage, just remember that you will share mortgage payment responsibilities. You will have to repay the loan if your child defaults on a payment.

Accept Their Pace

The experience of home-buying is different for everyone. If you’re unable to assist your children financially, look to assist them in other important ways. Tell them stories about your experiences buying or selling a home. Share any helpful tips or advice. Encourage their questions. Learn what you can about home-buying in today’s market so you feel confidently when you answer or recommend experts as they take the next steps in the process.

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