You never thought the day would come that the little baby you held in your arms is ready to buy their first home, yet, has no clue what they're doing. Although they are independent for the most part by now, here is an opportunity where you get to actually feel like a parent again in helping them with the process.
Here's a few ways you can help and educate them on their new found adult responsibility:
We all know the first thing looked at when applying to purchase anything is a credit score. Show them different ways they can make their credit score the best it can be in order to apply for the best mortgage rates and down payments.
Help your child out a little with their downpayment so they'll have money left for their reserves. All that is required for this is proof you have enough for the payment, transferring the money and signing a "Gift Letter" stating the money is a gift and does not need to be repaid.
This little bit of help can go a long ways in helping them through the home buying process.
Sign as a Co-Borrower
This works out more for you as a parent than anyone. Signing as a Co-Borrower allows you to get ownership interest in the home. This form of signing increases the chances for your little new homeowner of getting approved for the mortgage.
Become a Co-Signer
The most beneficial this route is for when the buyer's income is not enough to qualify for a mortgage.
Dip Into Your Retirement
If your child has not owned a home before, both parents are allowed to withdraw up to $10,000 from a traditional IRA penalty-free.
Certain factors come into play with each of these. Before helping out your child, be sure to show them how important and serious these acts are. There needs to be a trust between the two parties before proceeding further.
Contact one of our mortgage specialists today for more information about the home buying process!