Helping your adult children buy a house in Nashville isn’t always easy. In many cases, your children that have left the nest, grown, and are ready to buy a house cannot get approved. This could be due to their student loan debt, the lack of extra money to save for a down payment, or for another reason.
As a parent, you probably want to help your adult children buy a house in Nashville. However, you have to do this in the right way as it can become dicey territory. Here’s a quick guide to help you with the process of helping your children buy their first home in Nashville.
Set Some Ground Rules
With anything involving money or property with family, you have to set ground rules. IF you don’t, it could lead to some hurt feeling or something far worse in the future. A few ground rules to consider include:
- Disclose the assistance you provide to all members of your immediate family
- Document any gifts you provide
- Use contracts for all steps in the process
- Treat all siblings equally
Of course, every family situation is a bit different, so you will have to decide the ground rules for your specific situation.
Provide Down Payment Assistance
One of the biggest and most common ways to help your adult children with the home buying process is gifting money for the down payment. Providing down payment assistance isn’t an as easy task. There are many rules that govern how you can give cash gifts towards home purchases and there are also regulations from lenders to consider.
It’s important to speak to the lender your adult child plans to use for the purchase of a home in Nashville. Find out what they allow and how you can help.
You should also speak to your accountant about the rules for gifting money towards a down payment according to the IRS. Make sure you comply with the rules and laws before you decide how much you can gift.
Co-Sign on the Mortgage
Another way parents can help is by lending their credit to the adult child. This is done through co-signing on the mortgage, but it also comes with far more responsibility compared to help with a down payment.
When you co-sign, you are now becoming responsible for the mortgage for the property. This can become a sticky situation if your adult child cannot afford the payment at some time in the future. Co-signing may help the child, but you must weigh the risk before moving in this direction.
A few other ways parents can help their adult children buy a house in Nashville include:
- Buy the home for the child
- Assist with closing costs
- Help emotionally
- Finance the mortgage
As a parent, you will likely want to help your adult child buy a home in Nashville when they are ready. This guide provides some of the ways you help. It’s best to hire a good local real estate agent to help you and your adult child with the home buying process.