Buying a first home is a milestone moment for most, however, many young people are having to delay due to the well documented challenges that Millennials face such as high debt loads and a very hot housing market. In fact, according to the results of the NAR Home Buyer and Seller Generation Trends Report 23% of buyers 37 and younger used a gift to make a down payment and 6% utilized a loan from family or friends.
What are Some of the Options for Helping Your Child?
Thankfully there are many good options for helping your adult child with the purchase of a home. There are 4 common options to help: 1) a gift, 2) a family loan, 3) co-signing on the mortgage, and 4) buying the property outright and the doing a rent-to-own or land contract where you act as the bank.
Although there are many options, it is important to work with an experienced attorney and CPA to ensure that the solution best meets your individualized requirements.
How Can an Experienced Real-Estate Attorney Help?
While helping an adult child is a noble and many times right thing to do, there are other considerations. Having a well drafted agreement that clearly documents the obligation of both parties is an important step that should not be overlooked.
First, the purchase of a first home is a great responsibility and is an important step from being a kid to becoming an adult. Without a well-structured deal that is formalized with a contract, your child may not understand the seriousness of the transaction
Second, without properly documenting the gift, loan, or land contract there may be family strife between you and the adult child, as well as, his or her siblings.
The numerous considerations and implications of helping your child buy a home make it very important to get competent advice from professionals such as an accountant and real estate or estate planning attorney.
We at Matt Devitt Law, PLC are here to assist you before, during, and after the transaction. We are experienced in estate planning and real-estate matters and look forward to helping you. For additional information on this or related topics, or to learn more about estate planning, real-estate, or small business law please visit our legal blog at www.mattdevittlaw.com/blog