Gifted Down Payment, Refinance, Equity Release Mortgage, Living Inheritance - there are options!

We know purchasing a home is harder today than it used to be for a many different reasons. The price of real estate has skyrocketed, mortgage guidelines have become more stringent, the price of living is way higher and not to mention rising interest rates. All these reasons make it harder for young adults to get into the real estate market. Parents and Grandparents are wondering how they can help their kids purchase their first home.

Here are a few different ways a family member can help:

1) Gifted money for a down payment. A closely related family member is eligible to gift funds to go towards a down payment. Even the whole down payment can be gifted! It is important this money is a gift and not a loan. Lenders require a signed gift lender from the donor and the borrower, plus confirmation the money has been deposited into the borrower’s bank account.

2) Refinance to unlock equity for a gifted down payment. If a parent is wanting to gift a down payment but do not have the cash-in hand, we could look at refinancing their current home to release equity to be able to gift a cash down payment to their kids or grandkids.

3)Secure a HELOC on the donor’s home. If there is enough equity, securing a Home Equity Line of Credit is also a great option. A HELOC is a re-advanceable line of credit secured to the home.

4)Reverse Mortgage. Reverse mortgages are gaining more and more traction over the past few years. Reverse Mortgages allow seniors to access equity in their home for reasons exactly like gifting down payment to a grand child and they have the option not to make any payments!

It is MORE COMMON for parents to help children purchase than you might think. Another way to look at gifting down payment is thinking about it as a living inheritance. If you were going to pass on inheritance once you are gone, why not gift it now to give your kids a jump start. If you are curious about helping your kids or grandchildren enter the real estate market, let us know. We will have an option for you!