Today, A lot of parents enjoy the financial benefits of home ownership. Probably the biggest advantage is the fact that the principle you pay on the mortgage is like putting money in the bank, in the form of equity.
According to the Coral Springs Real Estate Market Report for October 2013, the median sale price during October was $320,000 which is a slight decrease of almost 1% from September’s median price. This data may lead to different opinions for first and second time home buyers. However, If you want to help your child with a home purchase, there are a couple of factors to consider.
Assuming that you have the financial strength as a parent and you really want to help your children acquire their own real estate property, helping means providing a loan with a normal interest rates or a loan with lower or no interest. In some cases this is effectively a gift.
Take a look at the financial strength of your child. Does he or she have a good job and a responsible savings discipline? Are they capable of paying the mortgage at the bank? Sometimes the best help you can give is to advise the child to keep renting (or remain living at home) rather than buying real estate that they can’t afford. If in fact your children has a good job and are considered a good loan risk. You can be their lender. In some cases, parents who have a sizable estate may give a gift so the child can use it and enjoy the benefits without having to wait until their parent passes away. This scenario is best discussed with your financial planner.
Another point to consider if you want to help your child buy its own home is the strength of a their marriage. There are cases, where a parent gifted $400,000 to help buy a house, and six months later the child’s marriage broke up. In this case, the parents just handed their soon to be ex-daughter or son-in-law a $200,000 gift. So, the best way to avoid this is to not make a gift at all or make the financial ‘gift’ in the form of a loan.
In the end, part of being a parent is knowing when to help and when to stand back.
Visit the GreatFloridaHomes website or call us at 954-695-7653 to learn more about home buying techniques.