So I guess I live in a HCOLA, doesn't feel like but sure. I certainly have always lived in expensive areas and my mindset has always been well you buy small, flip, and trade up. I certainly never expected to be in a position to help my kids buy a house. I have always been worried about our own retirement and retiring early has always been the plan. So the idea of forking over say $30-50k hasn't been on my radar. Neither has been forking over $25k for a wedding or $25k for a car.
But circumstances change and opportunities change. Now things are bit a different and perhaps we can. My kids will certainly now be getting substantial help from my mom for a house or investment account. I know that she plans on leaving them her house. She's 70 and hawaii real estate is valuable.
But recently a friend told me in confience she helped her son buy a house. He bought a $1.2M house and she owns 25% = $300k. She put down $300k and her name is on the deed as owner for 25%. Her parents did this for her and her brothers. They did this and when her brother got divorced they had to sell the house and settle our with her father (her mother had passed by this time) his share of ownership.
She said "no marriage is forever and she learned that watching her parents." $300k is a lot of money to gift your child and have them lose in a divorce. Instead she decided to be a part-owner in a house to help her son and daughter in law afford it and then if she and her husband die it'll be part of her son's inheritance. She also has a daugther and would offer the same deal even if her daughter buys while single.
That made me think okay that's what I'm doing. If we are fortunate enough to have that sort of money then I will likley help my children buy homes buy becoming a part-owner. As per our prior post I'm not sure I'm comfortable giving them $300k to buy a house. I think I might need to be an "owner".
Have you ever heard of this? Do you think it's a good idea?
February 22nd, 2022 at 08:02 pm 1645560143
If it's important to them to live near you and if it's important to you that they do, and you can afford it, you may want to help with housing. I think it's to early to tell where they will want to live. When. The time comes, maybe legal help to see what's really doable would be a smart idea.
Yes, I know people who got different kinds of help with their first mortgages. We did ourselves, a small loan to help with getting a lower interest rate-- and we paid it back!
February 23rd, 2022 at 12:53 am 1645577588
For someone who knows what they want to do with their life, or will do well in college while finding a path, assisting with education - both by helping them understand the financial impact of their options and also helping to minimize student loan debt is valuable.
For a child without a clear path, allowing them to live with you at reasonable rent - which perhaps you save for them - might be a better choice than paying for part of an education that they don’t want. Education or some other way to ‘invest’ for them might come later in their life.
Owning a home can be a benefit or a hindrance. Sharing ownership can protect you or cost you because you will have liability and credit risk that maybe you don’t want. You might also want a voice in decisions that will be intrusive for them and become a source of friction.
I don’t remember how old your children are, but my advice would be to max out retirement accounts, then save in other saving vehicles without earmarking money for any specific goal.
I also wouldn’t try to do the exact same thing for each child because their needs might be very different.
If you feel things are uneven you can always even them up via your estate planning.
February 23rd, 2022 at 02:48 am 1645584499
Because she has quite a bit in retirement funds that she doesn't think she will need to tap in any kind of major way, she decided to help each of us buy our first home. We are in a VHCOL area, and it's almost impossible to come up with a down payment while paying rent in the area.
Mom gifted me $100k, gifted my brother $20k (he doesn't live in the area, so his $20k made about the same impact on his home as my $100k lol), and just gifted my sister $20k, in addition to prepping to sell my sister the family home at a drastically reduced price (so a gift of equity of about $150k).
She is not a partial owner of any of our homes, she is not on deeds or mortgages. It was a plain and simple gift. However, I am the youngest, and bought when I was 40. We were all well established in careers and as adults. Maybe not always making the best financial decisions (see my blog for proof haha), but that would have just added a layer of complication that was wholly unnecessary.
All of these amounts are considered by all of us to be an advance on whatever inheritance we receive when she passes on. Her wishes are quite simple - split everything 3 ways. Having already gone through losing our father, we have learned to have these kinds of conversations without killing the vibe of the whole room lol. We all got very candid and transparent about that after he died. Her lawyer suggested some kind of formula that basically accounts for these individual gifts in her will, then calculate what the equal shares are after factoring them in. Need to go back and see him to make it all official, just waiting for the house sale to go through so she doesn't have to amend later.
All of that to say, while I think it's a great idea to want to be able to do that for your children, Carol has good advice to take it one big life step at a time.
February 25th, 2022 at 08:22 pm 1645820537
February 25th, 2022 at 09:02 pm 1645822926
February 27th, 2022 at 10:40 pm 1646001623