Helping our Adult Child Buy a Home

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huskerfan1414
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Re: Helping our Adult Child Buy a Home

Post by huskerfan1414 »

You would be doing your ADULT daughter and son in law a disservice by helping them buy a home they cannot afford, not to mention yourself. The goal should be to remove the "child" from "adult child".

Are they out of debt? Student loans, etc? That would be a nice gift if they have any student loan debt.

Otherwise, if you simply must help them with this house, I like the advice of, "Don't say anything to them, let them pick out a home they can afford, and then gift them later in the form of mortgage payments or reimbursing their down payment." This way they are in a home they can afford with complete ownership and they still get a head start from you.

Absolutely no matter what do not own 50% of the house.
The more I learn, the dumber I feel.
Jags4186
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Re: Helping our Adult Child Buy a Home

Post by Jags4186 »

I would suggest you give your daughter a lump sum and then let her and her husband decide what to do. If you become a source of income for them it could cause problems down the line if for whatever reason you no longer could provide that income. Don’t think it can’t happen — many people, wealthier than you, have come on hard times for a variety of reasons.
Living Free
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Re: Helping our Adult Child Buy a Home

Post by Living Free »

I agree - it would be very demoralizing to be an adult and live in a house half owned by one's parents (or even worse, by one's mother/father in law). Especially considering it seems that they both have good jobs. I also agree they should not buy a house together until they're married.
musicmom
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Re: Helping our Adult Child Buy a Home

Post by musicmom »

We live in a HCOL area.

DS, single, through grad school with a stablw, reasonable job, though not an extravagant salary.
A few years ago, he shopped for house he could afford the mortgage and taxes/insurance with 10% down. We chose to gift him cash to meet 20%down to avoid PMI.

He was surprised and grateful.
Five years later, he and his wife still enjoy the home together.
We're hoping they upsize when their family does.😁

We would never have offered ongoing assistance or co-ownership. We're happily retired and financially fine.
Hockey10
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Re: Helping our Adult Child Buy a Home

Post by Hockey10 »

This might be the most unanimous thread I have ever seen on Bogleheads. :shock:
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mmmodem
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Re: Helping our Adult Child Buy a Home

Post by mmmodem »

Consider your child may not accept your offer of help. When we got married, we had well paying college educated careers and lived in a HCOLA (SF Bay Area). My parents graciously offered to help with our home down payment. This would be a gift.

My parents and I get along great and I know they won't ask for the money back. However, I would think that if I ever wanted to sell the home and take out equity to pay for something, I would need to consult with them to some degree. I'm not using their gift as they intended, after all.

Plus, I'm willing to bet that if they wanted to see their grandchildren more, the subject of having helped us out with the down payment will be used to guilt trip us to visit more often.

I thanked my parents and told them we can afford the home on our own.
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Raymond
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Re: Helping our Adult Child Buy a Home

Post by Raymond »

Since the OP hasn't returned yet, I hope it's because he's busy, and not because he doesn't like the answers :(
"Ritter, Tod und Teufel"
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geerhardusvos
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Re: Helping our Adult Child Buy a Home

Post by geerhardusvos »

Lazareth wrote: Wed Jul 15, 2020 8:15 am
NotWhoYouThink wrote: Wed Jul 15, 2020 7:06 am This thread is astonishing. I have never seen the bogleheads all agree on any topic, ever. But we all seem to agree on this one.
Sandtrap wrote: Wed Jul 15, 2020 7:56 am One of the great challenges and shared wonder of a marriage is building a ship together without help and rowing it together toward a shared journey.
+1 +1

As an advance on inheritance, I believe husband and wife can each gift $15,000 to each child for total of $60,000 per year to help them buy the home of THEIR choice and ability.
Still waiting for OP to come out of hiding and respond to this 😅😂🤣🍿🍿🍿🍿🍿
VTSAX and chill
Silence Dogood
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Re: Helping our Adult Child Buy a Home

Post by Silence Dogood »

RocketShipTech wrote: Tue Jul 14, 2020 9:04 pm Agree with the others saying gift.

My parents contributed $250k to the downpayment on our $1.8M marital starter home. It worked out great.
I showed my wife this post. I'm not sure if we were laughing or crying.
Freetime76
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Re: Helping our Adult Child Buy a Home

Post by Freetime76 »

Sandtrap wrote: Wed Jul 15, 2020 7:56 am One of the great challenges and shared wonder of a marriage is building a ship together without help and rowing it together toward a shared journey.

At some point, no training wheels.
Love this statement.
Of course, an engagement is an exciting time for mom’s and dads, not to mention the couple...and buying your first very own home is a major milestone. So we get excited. By all means, give them a wedding gift of cash - to BOTH, I.e. the couple. By all means, gift a reasonable cash amount to help out (after ***clearing*** it with BOTH of them, I’d suggest. Should have NO strings attached). Provide them with a letter that the money is a gift, not a loan and no need to repay. The mortgage underwriters may ask for it.

However. In general. No. And stay out of it.
A. Making decisions together will build a stronger marriage for them.
B. Building their own wealth, dollar by dollar, will make them more resilient and value it more..both of them as a team.
C. The first year of marriage is really hard. They need to sort it out without mom or dad being right in the middle of their financials.
D. I’d suggest not rushing to buy. Dave Ramsey’s joke is that you need to know how far away from your mother-in-law to buy. In this case, be a friendly, supportive ear with lessons from your own financial journey. They’ll be more likely to stay close!! :D

I can tell you that my dad wanted to give me some money, less than $10K..he had plenty and his brother, my uncle had just passed away. I said thank you, but we want to do it ourselves (in my late 30s, moving and job transitions). He understood. Previously, my mom or dad has helped me/us in tons of ways - put in fencing for my dog, paid for a wood stove install, $5K in my 20s towards a down payment on my first house...none of it had strings.

There is so much satisfaction and feeling of achievement when one pushes through, gets creative, and finds away to succeed financially. Having twice as much handed to me wouldn’t be half satisfying. :wink:
MJD
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Re: Helping our Adult Child Buy a Home

Post by MJD »

They make good money. Let them chart their own course. Sounds like you raised a successful child.

Buy them a vacuum, bottle of their favorite splurge booze, and a ladder as a housewarming.
Osterix
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Re: Helping our Adult Child Buy a Home

Post by Osterix »

MJD wrote: Wed Jul 15, 2020 8:58 pm They make good money. Let them chart their own course. Sounds like you raised a successful child.

Buy them a vacuum, bottle of their favorite splurge booze, and a ladder as a housewarming.
Booze and a ladder is a recipe for disaster. :)
jumppilot
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Re: Helping our Adult Child Buy a Home

Post by jumppilot »

MJD wrote: Wed Jul 15, 2020 8:58 pm They make good money. Let them chart their own course. Sounds like you raised a successful child.
Completely agree. Let them get started in life and revisit in 10 years. Without a doubt, I would appreciate a cash gift now more than I would have when I was starting out.

If someone helped me with a down payment 10 years ago, I’d do the mental math and realize I can ALSO afford the payments on a new F-250! Or a 5 star European vacation!

Now, that money would go to kids college and paying off my mortgage.
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lindsayinsf
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Re: Helping our Adult Child Buy a Home

Post by lindsayinsf »

Re: itemizing, are you assuming this or have you actually run all of the numbers for their specific situation? For myself and my partner, if we were married and filed taxes jointly, in California, we would actually be worse off itemizing interest and property taxes on a $600k loan than we would taking the standard deduction. We probably earn the same or less than your daughter and her partner.

As others are saying, if you decide to gift them money, make it no strings attached / do so without any expectations for that money.

My experience - I have been saving for a down payment on and off as income allows for over 10 years. I live in a VHCOL area. About 5 years ago, my parents offered to "gift" me a large sum of money to help with a down payment. It was unexpected and exciting to think I would be closer to my goals sooner. As we talked about it, I realized it was not actually a gift, there were conditions both spoken and unspoken (that I get married, that I buy a too-big-for-me house with a long commute to my job, that I fill said house with children, that they could visit and stay with me whenever they want). I was not comfortable letting my parents make major life decisions for me. I am still saving up for my down payment. :D
Last edited by lindsayinsf on Fri Jul 17, 2020 9:55 am, edited 1 time in total.
tibbitts
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Re: Helping our Adult Child Buy a Home

Post by tibbitts »

All your (OP's) ideas are terrible; they only vary in degrees of terrible-ness(???)

If you afford it and are so inclined, you could gift up to the annual exclusion amount per year, without any constraints on what it can be used for.
knowledge
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Re: Helping our Adult Child Buy a Home

Post by knowledge »

So much of this decision comes down to your relationship with your daughter and money. If she's not entitled and you have no expectations, then sure go ahead and help her out financially. But it seems likely that anything you do could enable poor decision making down the road.

My vote would be to help spoil the grandchildren and/or fund their education, when they come. It's what grandparents are for. If you insist on helping out, then funding the downpayment as a gift looks to be the best route.
123
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Re: Helping our Adult Child Buy a Home

Post by 123 »

You would be doing your daughter and her spouse a disservice by involving yourself in their housing or financial matters. Yes you are trying to be helpful, as you see it. But just allow them to find their own way. If they have good jobs and good income allow them the joy of doing things for themselves. If you raised her right your joy at her ability to navigate life on her own will be far superior to the sense that you still need to be a force in her life in the event a "rescue" is necessary.
The closest helping hand is at the end of your own arm.
Nearly A Moose
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Re: Helping our Adult Child Buy a Home

Post by Nearly A Moose »

I'll confess to not having read all the responses, but in case helpful:

I live in DC, so similar-ish housing market to Boston. When we bought our first house, each set of parents were generous enough to give us what totaled to a mid-five-figure sum to help with the downpayment. The reality is that in these HCOL markets, it's often much harder to save up the money for the down payment than to pay the PITI. We ended up financing as much of the house as possible and in effect splitting the down payment and closing costs with our parents. Both parents could afford what they contributed, it wasn't the same amount, and there were no strings attached to either gift.

The gifts enabled us to buy a house a couple years sooner than we otherwise could have, and it let us live in a part of town that we have come to really love that we couldn't have bought into on our own. The timing was "right" in the "apple pie Americana" sense that we were able to get married, buy a place together the next year, and start a family the year after that. The timing was also right in that we were able to live in that house for about 5.5 years, at which point we realized that due to space, usage, and schooling needs, we needed something larger and with a different configuration. We had passed the breakeven point compared to renting and were able to sell that house and move into a more suitable one a half mile down the street, where we will hopefully live forever.

I mention that last part because, in a HCOL area, it's really hard to actually get a "starter home" in the way that earlier generations were able to buy a starter home. My first home was expensive, my second moreso. But I learned a lot of the homeowner things that you don't necessarily learn until you've been a homeowner yourself. I also learned more about my personal style and preferences. I made some purchase mistakes the first time, but they would have been much more significant and harder to unravel had I done that when buying my even-more expensive forever house (eg I realized I hate open-concept and that I won't ever buy another flip, I got tougher in negotiating).

Was it essential we bought a house then? No, it wasn't, and we could have bought somewhere cheaper or saved longer. But the timing worked out well, and our parents were in a position where they were willing and able to spare the money. But they also didn't overreach and subsidize a house we couldn't afford, and I got to learn what it felt like to be a little tight on my monthly payments for the first year as our income grew. Nor were they financially or emotionally tied up in the house, so we bought what we wanted to and didn't feel like Mommy and Daddy were telling us what to do.

So, that's my long way of saying:
--It's generous of you to consider gifting them the money, I hope they appreciate it
--I'd urge you to make it a true gift, no strings attached
--Help them with the down payment if need be, but they should be responsible for the PITI (or gift a set amount, and they can decide how to spread that across the downpayment, PITI, furniture, or whatever else); it's easier to manage a one-time windfall without expecting more money than it is to get a monthly stipend
--Unless you and they are completely sure on what they want, let this be their "starter house," not their forever house
Pardon typos, I'm probably using my fat thumbs on a tiny phone.
mnnice
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Re: Helping our Adult Child Buy a Home

Post by mnnice »

oldfort wrote: Tue Jul 14, 2020 9:29 pm
RocketShipTech wrote: Tue Jul 14, 2020 9:04 pm Agree with the others saying gift.

My parents contributed $250k to the downpayment on our $1.8M marital starter home. It worked out great.
Only on bogleheads is $1.8M considered a starter home.
I just removed a zero on all the Silicon Valley house threads.
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geerhardusvos
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Re: Helping our Adult Child Buy a Home

Post by geerhardusvos »

Should we start placing bets on whether OP will respond to any of this feedback?

I’ll start: I will withhold talking about VTSAX for a full month if the OP responds
VTSAX and chill
drk
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Re: Helping our Adult Child Buy a Home

Post by drk »

RocketShipTech wrote: Tue Jul 14, 2020 9:04 pm Agree with the others saying gift.

My parents contributed $250k to the downpayment on our $1.8M marital starter home. It worked out great.
In your intro review post, you said that you rent: viewtopic.php?p=5312690. What's the deal?
tim1999
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Re: Helping our Adult Child Buy a Home

Post by tim1999 »

oldfort wrote: Tue Jul 14, 2020 9:29 pm
RocketShipTech wrote: Tue Jul 14, 2020 9:04 pm Agree with the others saying gift.

My parents contributed $250k to the downpayment on our $1.8M marital starter home. It worked out great.
Only on bogleheads is $1.8M considered a starter home.
It would need to have a 10 year old Toyota Corolla in the driveway to complete the package.
NYCaviator
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Re: Helping our Adult Child Buy a Home

Post by NYCaviator »

Seems crazy to me that a newly married couple in their 20s need (or should even be looking at) a $1.5m house, even in the Boston area. If they can’t afford it on their own, they shouldn’t buy it.

As much as people want to help their kids, if they have good jobs and aren’t at risk of being homeless or financially destitute, let them save up and do it on their own. There’s a lot to be said about growing up and learning life‘s lessons without using parents or in-laws as a financial cushion. Let them rent a place and eat ramen for a few years as they save up on their own for a place they can actually afford. I guarantee you their marriage will be stronger for it, and their relationship with money will be much better.

I know far too many people whose parents supported them financially into adulthood, and their ideas about money and saving and living within their means are completely unrealistic.
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