Helping Your Child with his First Home Purchase

Posted by on Thursday, February 5th, 2015 at 9:06pm.

Many parents are stuck on what they should do when it comes to helping out their children with the purchase of their first homes. A major factor in making a first time home purchase is the down payment. This is often a dilemma for the younger generation since they have not had sufficient time to build up enough funds and they often approach their parents for help.

In order to make the right decision about whether or not to help your child out consider the following:

1. Helping your child can be a great and very positive thing to do but it may put a damper on the relationship between the two of you if the money is given with a lot of strings attached.

2. Never give out more than you can afford. Consider your own retirement goals and be certain that handing out the money that will not endanger these goals. A decision should be made based on sound financial decision making and not only on emotional attachment and the desire to help out your child.

3. Personal loan agreements can come in very handy when it comes to lending your child money to assist with a down payment. Your lawyer can provide this for you. It puts everything in writing so that no disagreements can come up later.

After your child has made the down payment and is moving in you must respect his privacy and offer your support. Just because you helped with the initial payment does not give you the right to lay down any rules regarding the home and its upkeep. Although it may be difficult, you’ll need to give your child the freedom to run his house as he sees fit. Of course, as a parent you’ll always have the right to give advice, but you can’t give orders. This is a financial deal only.

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