Parents should carefully evaluate their financial condition before assisting their children inbuying a home. To decide the best course of action, they should speak with a financial counselorand a tax expert. Parents can help their kids buy a home in a number of ways, including bycontributing to the down payment, covering closing costs, co-signing for the loan, or having themstay home to save money.

Although the majority of these options entail giving your kids money, choosing where that moneyshould come from is a crucial one. Pulling money from a savings account or 401(k) retirementaccount might be challenging for parents who are getting close to retirement if the money isrequired for retirement. Without it, they might find up relocating into the home their childrenhelped them buy.

Gift: Parents can give their children a portion or all of the down payment for the home. The IRSallows individuals to gift up to $15,000 per year without incurring a gift tax.

Loan: Parents can loan their children the money for the down payment and/or closing costs. It isimportant to put the terms of the loan in writing and specify the repayment terms and interestrate.

Co-signing: Parents can co-sign on their child's mortgage loan to help them qualify for a loan orsecure a better interest rate. However, co-signing comes with risks, as the parent is legallyresponsible for the mortgage if their child defaults.

Equity release: If parents own their own home, they could consider using equity release toaccess some of the equity in their home to help their children buy a home. However, this optionshould be carefully considered as it could impact the parents' own financial security inretirement.

Investment: Parents could invest in a property with their child as a joint owner, which would allowthem to help their child buy a home while also building equity and potentially generating rentalincome.

It's important to note that each of these options has its own advantages and disadvantages, andparents should carefully consider their own financial situation and goals before deciding whichoption is best for them and their children. Consulting with a financial advisor or mortgage brokercan also be helpful in making these decisions.

Like this update? As your local real estate professional, I can provide more great tips like this and answer any real estate information questions you may have. Contact me today!

JUAN MESTRE REALTOR ASSOCIATE RSPS, SFR, AHWD, C2EX®

RAISING THE BAR FOR REAL ESTATE SERVICES 

CONSIDER: Since I'm not a lawyer but your neighbor Realtor Associate, you should consult an attorney and your CPA before making any decisions.

 If you wish to find your Home or to start your journey towards Home Ownership, Let’s start working together reach me at 305-776-5677 or register at www.juanmestre.com or email mestre.j@ewm.com. 

Sourced and digested from several locations including but not limited to: RisMedia for BHHS.com/blog, EWM Realty & my knowledge