With many college graduates unable to find the kinds of jobs that would allow them to save up enough money for a large down payment, which many lenders now require, some parents are helping their children buy their first home.
Parents considering this option first need to consider whether this is a viable and affordable solution to their child’s housing situation. If the answer is “yes,” then there are a variety of financial arrangements that can be arranged.
Parents can lend a down payment (or the entire mortgage) to the child.
The parents can co-sign a bank loan, enter into a shared-equity arrangement with the child, or gift the money.
Another option is for the parents to buy a house and work out a rent-to-buy arrangement with their child.
There are upsides and downsides to each of these arrangements, so parents are advised to talk to a financial planner before making the decision.
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