What’s the best way to help my child buy a house?

Dear William,

My child works so hard he is 33 years old works in the banking industry and is finding it very difficult to purchase a home. He just got married and I want to help them but I don’t know the right way to do it. Can you help?

Carl J - Westchester, Los Angeles

Hi Carl,

First of all, how cool is it that you’re a proud parent and you feel like your son is working really hard! 

Times have definitely changed since the time you were buying your first home. Homes are becoming commodities and 1 in 5 single family residences are being purchased by investors. I remember as a child my mother telling me how important it was to buy a home because it is your biggest asset. It’s more challenging than ever to get into the housing market with a paycheque and we’re noticing lots of really solid buyers just not making the financial cut. Does that ring a bell? Did you feel that way too when you purchased your home?

First time homebuyers are more than ever relying on help from friends and family financially. I’ve been in scenarios with clients where parents will use their IRA, cash in their accounts or equity in their property portfolio. In fact, 64% are using financial resources from their families and friends to get into their first home. Some parents are even calling it an “early inheritance”. Instead of waiting until after they’re no longer physically here, they give them money now for the house and feel that they can enjoy seeing their children prosper while they’re around to see it. Some parents decide to claw back the original loan to their children from the equity growth in the future years to come. I have experienced other scenarios where the children pay back the loan in multiple payments. I’ve also seen monetary gifts. Some parents go on title. 

I think the most important thing is how does it make you feel to help your child?  It appears that the growth of your child and his future is important to you and you love seeing how successful he is so maybe this is a perfect time to have a conversation with him about planning to help support them if you can in their residential purchase?  You may also want to entertain the idea of creating rental properties for your children to enjoy income so they are able to increase their income and afford the mortgage payments for the property they want to move into. The possibilities are endless. The great news is that you are an awesome parent. Here’s a link to our mortgage calculator if you feel like playing with numbers!

http://www.rubelashmangroup.com/mortgagecalculator