How Parents Can Help Adult Kids Buy Homes

Key takeaway: Parents can help, but not at the expense of their own retirement or emergency savings.

Rising home prices have many parents stepping in to help adult children buy. The article covers options like down payment gifts, family loans, cosigning, co-borrowing, shared ownership, and buying a home and renting it to the child, along with the mortgage, tax, and estate complications that can come with each.

Michael McAuliffe, president and founder of Family Credit Management, says the biggest question isn’t whether you can help, but how much you can help without hurting your own future. He has seen parents sacrifice their financial security for a child’s home purchase, only to face unexpected struggles. As he puts it: “Kids can borrow for a home. Their parents can’t borrow for retirement.”

The article also lists lower-risk alternatives, such as letting adult children live at home while they save, sponsoring financial counseling, or giving a smaller gift that doesn’t jeopardize your finances. Read more about retirement savings here.

Q: Should parents cosign a mortgage for an adult child?
Cosigning carries real risk, because the parent is fully responsible if payments stop. Weigh it against your own retirement and emergency savings first.

Read Full Article on U.S. News & World Report