First Time Homeowners: Should I Help My Children Buy A Home?

Should I help my children buy a home? It can be especially hard for first-time homeowners in Southern California…

Buying a home, especially in southern California is expensive. Parents of adult children often ask, “Should I help my children with a down payment for a home?” Stay Tuned as we’ll discuss what you need to think about…

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Alex: Buying a home in Southern California is expensive and so parents of children often ask should I help my children with a down payment on their first home? Stay tuned we’re going to discuss it…

Alex: So Anthony buying a home in Southern California can be a challenge for younger people trying to get into the real estate market. Things are really hot right now, so parents with the means and the ability to help are asking “Should I help my kids get into a first home? They’re good kids I want to help them out, and if I do what’s the best way to help them?”

Anthony: Yeah every situation is is unique and you see that too. I think my views have shifted on this a little bit, whereas as an advisor I’ve seen people be frivolous with this decision. In other words, they’re not considering the big picture, pulling money out of the wrong places, gifting it over.

Oftentimes the kids aren’t grateful for it, in some ways feel a little bit entitled to it and as my kids have gotten older and our oldest is going off to college, I see that we may want to help if we can because we want the family to be in town and not move across the country.

Alex: Yeah I mean the intention’s good, there’s good intentions, but I think what I’m hearing you say after the years of coaching clients through this is that although the intention is good you have to be intentional about what you’re doing.

Meaning having a sit-down conversation perhaps about what the parents are planning to do. What it looks like. Helping the kids maybe understand that. Not to say all kids are ungrateful, but realizing we have been blessed with this opportunity to help you and I hope you understand that this is a blessing.

Anthony: So really it comes down to constructing the proper plan, not only in the amount but where’s it going to come from? Is it going to come from investments? Real estate? Retirement plans? And if so I need to consider the tax aspects of that.

Am I willing to take on debt to help them through a home equity line or refinanced mortgage? That can be dangerous and we need to be cautious about those sorts of things.

So having a plan looking at it in the context is going to hurt my overall financial plan is a big part of it as well.

Alex: Sure and then the other thing too I know that we notice is you know people get very kind of laser focus on one thing which is “helping them with a down payment” But there are many other ways to help your kid get into a first home or even helping them with their first home.

Even my parents for example when they talk to me about this they say “whatever home you decide to purchase, what we’d like to do is help you with the furnishings of your home” We’d like to help you with if the carpet needs to be ripped out, we can help you with that.

So you see this a lot too is thinking creatively and thinking outside the box. Not just how much of a down payment can I help them with, but are there other ways that I can help creatively that still accomplish my goal?

Anthony: Yeah absolutely and every situation is so unique that’s why it’s not a black and white answer. So I think as people consider this if they have the means to do so, really talking about it within the context of their financial plan, talking about it with someone that’s more objective.

When it comes to our own family we’re we’re more emotionally engaged, more subjective, and it’s hard to see these other avenues of how you can do something.

Alex: Well and that is the value of finding that trusted advice. Almost acting like a sounding board for your ideas and your opinions because like you said you know when things get involved with family I mean we don’t use rationale all that well.

The emotion comes out, the heart comes into play, and so having that trusted advisor sit down with the mind and go let’s take a look back at the entire financial picture. Just like anything else we would in financial planning it’s incredibly important.

Anthony: That’s the nice thing about financial planning is it’s like for some people they’re not going to even consider that as a goal, it’s not important to them, and for others, it’s supremely important. So a financial plan can be tailored towards somebody’s priority. What are they value? and if so, then let’s try to find the best way to make it happen.

Alex: Financial planning is supremely important and it should always be married with goals, objectives, investment plans, etc.

These are the types of things that we help clients navigate with and grapple with give us a call visit our website. We’d love to talk with you.

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More Reading: Successful Investing Lessons from 2020

This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. See our website at onedegreeadvisors.com for full disclosures.


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