First-time homebuyers face significant challenges entering the housing market due to high home prices, rising mortgage rates, and student debt. Many young buyers are turning to their parents for assistance, which has led to a notable increase in family involvement in home purchases. Parents are providing help in several ways, including gifting down payments, co-signing mortgages, and co-owning properties. Clear communication and written agreements are essential to manage these arrangements, and involving neutral parties can help ensure fairness and clarity in financial support relationships.
High home prices, rising mortgage rates, and student debt are creating barriers for first-time homebuyers, leading to parents increasingly assisting with financial support.
From 1994 to 2022, the proportion of young homebuyers relying on older generations for co-signing or co-ownership doubled, with up to 38% of Gen Z homebuyers receiving help from parents.
Different forms of parental support include gifting down payments, co-signing mortgages, and co-owning properties, each with legal, financial, and emotional implications.
Setting clear boundaries and expectations through written agreements, like co-ownership or shared equity agreements, is crucial to avoid misunderstandings and conflicts in the future.
Involving a neutral third party, such as a financial planner or estate attorney, can help families navigate the complexities of family-financed home purchases and ensure clear expectations for all parties involved.
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