How Parents Can Help Their Kids Buy A Home

In today’s – 2011 – home buying environment parents may be able to play a very big role in helping their kids become homeowners. Parents can provide two very important parts of a buying a home – down payment and income stability. In the end however, helping your kid buy a home may be a long term financial gift worth considering no matter how you actually help them.

To break this topic down, we’re going to look at it from the side of the parents and then from the view of the son or daughter getting help. We will cover from the kids point of view in another article.

Parents – if you have the financial backing to help your kid(s) out with buying a home, but you have been holding off to make sure they get taught one more lesson about standing on their own two feet – you may consider taking off the teaching parent hat and put on the helping them out parent hat. From a financial standpoint, helping your kid get out of the rental race and into an equity building situation early in life may help them more than the lesson you are trying to teach them. Interest rates are still at historical lows so your assistance with a downpayment and even co-signing for them could help them save a lot more money in the long run then the lesson of teaching them to save. Additionally, in many parts of the country home prices are as low as they have been in 10 years which means great deals potentially leading to even more savings and opportunity for long term financial health.

And let’s face it, jobs for the college graduate aren’t there like they used to be so you may consider stepping in if you can afford it.

Depending on the lessons you have already taught your children – like financial responsibility, maturity among other things you can help your kid in several ways when it comes to buying a home:

  • Gift your kid a home that you purchase outright. If you don’t want to gift it to them, you can certainly let them pay you rent (or pay themselves rent in the form of a savings account etc.)
  • Keep a watch over their financial matters (if they agree to it) to keep them shielded to financial scams etc.
  • Help them purchase a home by either co-signing on the loan or giving them financial advice relevant to their income, assets and even credit. Again, it is only a good idea to offer help if they are open to it.

Only you can decide how to help your kids with buying a home. There is no right or wrong way to do that we’ll spell out. What we do highly suggest is that you get some financial, tax and legal guidance as there is probably a way to best help given your personal situation which is most likely different from your neighbors, other family members, and co-workers.