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Helping Your Child Buy a Home

Alerus | MAR 20, 2018

How Quickly They Grow Up

Spend a few minutes talking to parents whose children are now grown up and you might hear a common refrain that goes something like this: the years go by so fast, one day they were in diapers and the next day they were moving out of the house. 

When a child moves out, parents realize that while their roles may change, the desire to help their children achieve their dreams never goes away. Home ownership is often one of those dreams, and parents can easily find themselves searching for ways to help make it a reality for their now-grown children. Fortunately, there are a number of options available to help parents to do exactly that. 

Gifting a Down Payment: For most young adults, who are early in their careers and possibly carrying student loan debt, the down payment is the highest hurdle to home ownership. If a parent is financially able, a gift of some percentage of the down payment can lower or even remove that hurdle. Just make sure to speak with your financial advisor first to make sure it makes sense for you.

Co-Signing: This is a common way for parents to assist in a child’s home buying efforts, but there are a few things to keep in mind: You will need to qualify, just as if you buying the home yourself. Also, the loan will become part of your own credit portfolio. Be sure that taking on debt does not affect any large purchases you may want to make in the future. Finally, remember that if your child becomes unable to make payments, you will be obligated to make them yourself.

Providing Advice: Sometimes the best way to help is to offer guidance. Have an honest conversation about why your help is needed, and let your child know you will need to understand his/her personal financial situation. If their credit is in tough shape, perhaps the best advice you can give is to wait on trying to buy.

Educating: It’s never too late to learn more about financial health. Help your child understand the concept of credit and how to responsibly manage it. Instill good savings habits at an early age if you can. And explain to them that expenses don’t end with a home purchase; there are taxes, maintenance costs, and plenty of other expenses to consider.

The mortgage bankers here at Alerus help people purchase homes all over the country. Reach out to any of them with any of your home buying-related questions!


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