Each parents want to help their child when they want to start a new fresh. According to the National Association of REALTORS – “23% of those 37 and younger used a gift, and 6% used a loan from family or friends to purchase their home.” However, there are many other ways parents can help their adult child buy their first home. And this guide will describe home buying advice that saves you time as well.
Is It Important to Buy Your Child a Home?
We have covered the pros and cons of this so that you can consider before making your decision.
If you are thinking about purchasing a home for your adult child, speak to a legal, financial advisor. An expert can help you make the best decision.
Let’s have a look at the pros and cons.
Pros
One of the rewarding things in life is making a home for your child when you do it properly.
- If you plan to buy a home for your child, you have to start investing in your child’s future wealth.
- You should consider the inheritance tax advantages.
- You can think about mutual benefits on the property costs when they plan to pay you back.
- As a parent, you can help your children by investing property.
Cons
Most parents argue that the best way is to find their children their way so that they do not depend on their parents. Thus, you should consider a few cons before buying a new home for your adult child.
- They may not keep up the damage payments; instead, they will depend on you.
- If you do not keep up with payments, you may end up with your retirement savings.
- You may not be able to depend on your child or entitlement financially.
If your child is financially dependent and able to start building a new home at a younger age, you may not need to help them. But if they are stuck somewhere, you can assist them. Still, before making your best decision, make sure you think twice or take an expert’s advice.
Things to Consider Before Purchasing a Home for Your Adult Child
- Draft a Detailed Agreement
- Test How this Could Affect the Relationship
- Make Sure Your Estate Is In Order
- Don’t Live Beyond Your Means
- Don’t Think With Your Heart
- Draft a Detailed Agreement
You should always make a draft legal agreement so that you and your child feel comfortable. If your child misses a loan installment, you don’t need to pursue a lawsuit. But the main objective of the agreement is it shows the expectations limit of your child that protects you from any unwanted expenses.
You may feel strange to yourself if you have a great bonding with your child. But this agreement helps you de-escalate any kind of disagreements over the loan terms.
- Test How this Could Affect the Relationship
It’s crucial to consider how gifting a large amount of money to your child could change things since you cannot put the price on any great relationship, especially when it comes to the family bond. Generally, children could feel indebted to their parents, or sometimes they think it has caused stress on their relationship with their parents. That’s why before giving your adult child a big amount, you should talk to them beforehand.
- Make Sure Your Estate Is In Order
When it comes to giving money or loan to your child, it is very complicated. Additionally, you should consider how this will affect your financial plan. Thus, consider how you want to provide assistance to your child that won’t affect your financial plan.
- Don’t Live Beyond Your Means
It is very important not to give up beyond your means when you want to help your child as much as you want. So. you should make a proper financial plan when you want to purchase a home for your child.
- Don’t Think With Your Heart
Last but not least, don’t think with your heart while making decisions. Most parents make wrong decisions since they think from their heart. Make a plan, then execute it.