Wife and I have a HELOC that we have never used. My thought when we took it out three years ago was just to do so when our numbers were strong and to give us options down the road.
Our 27-year-old daughter makes a good income with annual raises and has expressed an interest in buying her first home. She's saved somewhere north of $100,000 so far but much of that is in her 401k, so not something she should touch for a down payment.
Anyway, I'm curious if anyone else on here tapped into a HELOC to help an adult child purchase their first home? To be clear, the chances of us actually needing the HELOC money ourselves are extremely small.
Using HELOC to help daughter purchase first home?
Re: Using HELOC to help daughter purchase first home?
We plan to gift funds to our two adult children to help with home purchases when the time comes.
However, that will come from money that we’ve already saved.
We would not take on debt to do so.
However, that will come from money that we’ve already saved.
We would not take on debt to do so.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Using HELOC to help daughter purchase first home?
I agree with this.
My 27-year-old child has been saving in their 401k and Roth IRA as well as a regular savings account. The savings account holds their savings for a house down payment and their emergency fund. (I have been helping with both matched contributions to their Roth account and annual gifts toward their downpayment.) (I keep my gifting below the annual gift tax limit. For 2024, the annual gift tax limit is $18,000.)
It would be wise for your daughter to have a good-sized emergency fund before taking on a house purchase.
It's great that she is saving. Could she be saving more? The early earning years are an excellent time to start saving in a Roth account, as the horizon for tax-free earnings is quite long.