Home > How to help your kids buy a house

How to help your kids buy a house

February 22nd, 2022 at 05:57 pm

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?

6 Responses to “How to help your kids buy a house”

  1. Carol Says:

    It's an okay idea, but I think you are being premature. In regards to yesterday's question, I think you could consider paying their after high school education, college or training in full with them working for their spending money.
    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!

  2. Lots of ideas Says:

    I think what you do depends a lot on the child.

    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.

  3. FocusedinmyForties Says:

    My mother helped each of my siblings and I buy a home. She and I my father made good decisions and started working early in union jobs that provided pensions, as well as saved on their own. Sadly, my dad passed before he could really enjoy their retirement together, and left my mother quite a bit in retirement funds. In retirement, she brings in more than she did while working, especially once she started drawing SS.

    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.

  4. rob62521 Says:

    Every state has different laws, so I'd check that out first. Here in Illinois, because my parents had both been married before and had nothing to do with children from previous marriages as far as finances, they put my name on the last house they owned. the only thing is we didn't realize is a half sibling could have tried to sue, so be sure and check what's going on with your state. I kept a record of everything we paid for before my mom died so if a half sibling had tried to sue, I could take that out first.

  5. VS_ozgirl Says:

    I think it’s a nice way to help your kids get their feet in the property market. I would probably be a silent owner and not want to have any input into whatever they do with the home from when the gift was given. Also too your children may not stay in the home forever as moving house is common so probably consider what you would want to do if that happens. If they build equity they will not need your help to get into their next property so do you want the deposit you gave back? Or like in focusinmyforties does that gift get deducted from the inheritance they would receive? Anyway, good on you for thinking about helping your children as it’s so unattainable for young people these days.

  6. LivingAlmostLarge Says:

    Interesting thought about being quiet. And nope when they sell they give you your share.

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