Often, children leave the nest early so they can attend college or find jobs. Sometimes, they move out to simply learn how to become independent. Most of that time is spent in dormitories or apartments, but as your kids get older, they start thinking about buying their first home. Have you instilled a sense of good credit in your kids? Are they financially ready? Becoming a first-time homebuyer is the start of credit for many kids and this is something you start working on at an early age. Here are some guidelines and ideas to help them afford their first home.
Providing Advice and Support
Most parents want to help their children succeed financially. However, before that, look into giving your child some seasoned advice. Take the time to assess their goals with them, assess their credit and financial situation, see what kind of savings they have already accrued. Once you have that figured out, you can help provide advice about different financial strategies and where to start in the process of what they can afford.
Giving Cash Gifts or Personal Loans
Offering your child a cash gift or personal loan can be tricky. As your child is a first-time homebuyer, this may or may not work. You may want to consider having your child sign a legal document if it’s a loan, then they will have to eventually pay that loan back. This is good faith, so if you have any sort of trust issues that your child may or may not pay you back, it’s probably not the best option. That said, also giving cash gifts for your first-time homebuyer to put as a down payment is a popular option for parents, too. Gifts you don’t have to pay back, but a loan you do – so make sure you stipulate exactly what this money is, and what it’s for.
Buying a Second Home for Your Child to Rent
If you have the means or if your home is paid off, you can consider purchasing a second house that you can rent out to your child. This is helpful for your child especially if they are unable to get a first-time home buyer loan, which a lot of children without credit cannot get.
Overall, making sure your child’s finances will allow them to realistically afford property is important. Home rates are rising, so getting an affordable home for the first time can be a tricky process. Making sure that everything is in order before your child is even ready to look for homes can help them get a great deal on a search for their first piece of property.
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