We are in some crazy and uncertain times. Rarely anyone has a stable financial situation and can venture into the home buying process with a calm mind. That is why having a certain helping hand can go a long way. With that said, here are four ways parents can help adult children buy a home.
Four ways parents can help adult children buy a home:
1. Let your child live with you for the time being
Saving money to buy a home can take more than a couple of years if you have bills, food, and schooling expenses to think of. And inviting your kid to live with you, for the time being, can shorten that time quite easily. Not only will it take away the rent payment burden, but it will also help them sort any financial problems and further focus on saving more money. After all, once their relocating to North Carolina is finalized, chances are you won’t get to see them as much. So, this period does not have to be bad at all. Just make sure not to pressurize them by asking too many questions regarding their finances.
2. You can gift the down payment
If you want to help your child financially, but avoid paying for the entire house, this might be the option for you. That is, if you have the resources for it. You can gift part or all of the down payment. Another option is to take care of other home-buying expenses such as closing costs and Realtor fees. Keep in mind though that gifting money to a child can create problems with a lender. Namely, according to some sources, gifts for down payments must have a verifiable source. They cannot be loaned and must be accompanied by a formal gift letter for your application.
3. Become a co-borrower or a co-signer
If your child is overrun with debt or has a bit of questionable credit history, it might be smart that you, as parents, apply for the mortgage with your child as either a co-borrower or co-signer. This is likely to increase the chances that your kid will be approved for a mortgage. Keep in mind, though, that co-borrowers and co-signers are not the same things. Being the former means that you apply for the loan with the child and share the mortgage payment responsibilities. The latter role requires you to repay the loan if the child defaults on a payment and/or isn’t able to pay the rest of the loan.
4. Taking only certain expenses
As said, these are uncertain times, and sometimes the ways parents can help adult children buy a home are not backed with a great financial situation. Know that this is not the end of the world. Perhaps you can cover their relocation services North Carolina, which are not that expensive at all. Sometimes you can help only with giving a piece of advice or two. You can educate them on the process of buying a home, and what there is to expect. As said, every little bit helps.