Real Estate Trend: Millennials Turn to Parents for Homebuying Help

If you find yourself going to your parents for help to buy a first home or step-up home, you aren’t alone. According to a new report by loanDepot cited in a U.S. News & World Report article, 17 percent of parents help their children ages 18 to 38 buy a home. Before asking your parents for financial assistance to buy real estate, brush up on the benefits of new construction homes such as energy-efficiency, less maintenance and safety. The report showed parents have already helped financially or plan to help with the future financing of a child’s home. Seventy-five percent of the millennials surveyed who had bought a home said they couldn’t have done it without the financial gift from parents.

Communicating about options

When a parent provides financial assistance, they often want to make sure their children invest wisely in a home. Your parents will likely feel nervous about the prospect of you investing in a foreclosure or distressed property. When you take them to visit a new home community, they often see the value of owning in a better area. Your parents have a vested interest in making sure you are in a good home in a good neighborhood. Master-planned communities often provide amenities including recreation for children and adults.

Finding different ways to help

If you are selling your starter or entry-level home that you bought during the housing boom, you might walk away with very little cash for a down payment on a nicer, step-up home. Depending on your parents for a financial gift matters in terms of affording a more spacious and higher-end home. According to the study, in the last 5 years 65 percent of parents contributed to a down payment on a home for their millennial, while 25 percent covered other expenses, 24 percent helped with closing costs and 21 percent co-signed a mortgage. After reviewing your financial paperwork and information, your lender will advise you on what kind of help will be most advantageous for you.

Although your parents can help you with the financial costs of buying a home, you should depend on a Realtor to help you with selling your current home. In today’s real estate market, it pays to sign up for the Move-Up American program so you save money on real estate transactions. For more information about the Move-Up America system for selling a current home and buying a new construction home in an upscale area, please contact us.

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