If you would like to buy a home for your child, there are many ways of going about it other than buying a home and gifting it to them. Here are some of the different approaches you can take:
Loan Them Money for the House
This is one of the best options for when the kid doesn't have the down payment but can qualify for a mortgage. Loan the kid the down payment instead of letting them save for it as that may take a long time.
Before loaning your kid money, however, confirm that they have the ability to repay it and are responsible enough to do it. It would be difficult to get your money back from your child if they aren't willing to give it back, even if they have it. You can protect yourself further by having them sign a formal loan agreement that spells out all the terms and conditions.
Cosign the Property's Mortgage
If your child doesn't qualify for a mortgage yet, then you can help them qualify for it by cosigning their home loan. Maybe the child has just cleared college and doesn't have a solid job or a good credit that may convince lenders to loan them money. Putting your name on the loan applications will help convince lenders that the loan is viable.
Of course, such an arrangement means you will be on the hook if the child fails to honor their side of the bargain. Therefore, only take this route if it's the only viable option or if you are certain the child can be relied upon to commit to the repayments.
Co-Own the House with Them
In this case, you don't just co-sign your child's loan but become part owner of the property. This means you contribute to the down payment, co-sign the loan, contribute to the mortgage's repayment and partially responsible for all expenses related to the house. It is, for all intents and purposes, the same as owning a house; the only difference is that you own it with your child. You can have a co-ownership agreement that allows your child to buy your share of the house when their financial status improves.
The best approach depends on different factors such as your financial status, your child's financial status, and your child's reliability, among other things. An experienced property professional can help you weigh these and other options so that you can take the most suitable one for your situation.
Share16 October 2017
After I decided to buy a new home, I realized that I probably needed to prioritize the things on my wish list. Since I am not wealthy, I realized that I probably couldn't get everything that I wanted out of a single home--at least, not this time around. Fortunately, I worked with an incredible real estate agent who helped me to figure out which type of property would pay off in the end. Finding a home took a lot of time, but I am really pleased that I found the right one. This blog is all about learning to prioritize your home hunting wish list so that you can have the home and financial situation of your dreams.
