HOW CAN PARENTS ASSIT HOME BUYERS?

We all know parents want to assist their grown children achieve the American dream. Just what can they do in this respect?

1. Cash for the down payment. A great way to assist the kids, but you must be careful in how you handle it. Most lenders will allow a "gift" from the parents but it must truly be a "gift", not a loan. Parents amking a gift will probably be ask to sign some sort of legal document stating it is indeed, a gift and the child is not expected to repay. Any one is allowed to make a gift of up to $12,000 per year without the recipient having to pay tax on the funds. Therefore, a couple could give a total to $48,000 to a married couple tax free. Nice downpayment.  Parents could also give this amount without the gift clause if they do it well ahead (a year or so) of the purchase. Lenders look carefully at borrowers past bank statements and question where large sums came from so you will have to plan ahead if this is to be a loan and not a "gift".

2. Cosign on the mortgage. This will certainly assit your child getting a mortgage, but it will also mean you may be on the hook if payments ane not made in a timely fashion and they will affect the parents credit rating same as the childs. Be sure your child will be able to make the payments of you will have the burden on you.

3. Invest in the home your child will occupy. You and your child could go in together to buy a home with the understanding it is an investment and you clearly define who gets what share of the income from a later sale. this could certinly benefit both parties, just be sure there is a clear understanding before the purchase.

4. Parents without the financial means for any of the previously discussed ideas can still help their children make a home purchase. Sadly, one thing rarely discussed in a family is financial matters and the child is sometime left to their own devices when making decisions on home buying. Help your child by giving them good sound advice on home ownership, how much they can comfortably afford to spend, how to avoid overpaying, etc. You will both benefit form this kind of discussion.