Buying your first home is not an easy feat, especially if you’ve been scrimping and saving for a down payment and want the best possible mortgage rate. However, there are ways to get around having to come up with a 20 percent down payment, including, in some cases, taking out a higher interest loan in exchange for putting a smaller amount down. For those who don’t have that option, though, or for those who don’t want to be bound to a high-interest loan, there may be an alternative: asking your parents for help with a down payment.
5 Reasons Why Parents Help Children Purchasing a New Home
If you are a millennial or generation Z-er, there are a number of reasons why your parents may be willing to help you out with a down payment to buy your first home, beginning with the fact that the relationship between parent-child for young persons in these generations is much different than it was in previous generations. Often times, parents today offer more support for their children than their own parents did. In addition to providing continued love and support, parents may want to help children purchase a home for several reasons:
- It’s empowering for the parents;
- Parents view it as a good investment;
- Parents view it as an opportunity for children to settle, get married, have children, etc.;
- Parents don’t want children to move back in with them; and
- There may be tax benefits for parents.
5 Tips for Asking Parents for Money for a Mortgage Down Payment
Considering that many parents may be willing to support children in purchasing a home by helping with the down payment, the next question is how to ask for help with a down payment. Some tips for asking include:
- Do it in person – over-the-phone or video chat asks aren’t appropriate for something this big.
- Explain the benefits and be precise – explain your exact situation, the benefits you and your parents will derive from helping with the down payment, and exactly how much you need.
- Have information to back you up, like already being pre-qualified for a loan and working with a lender.
- Invite your parents to be part of the home-buying process, which may make them more comfortable.
- Offer to pay back the family loan. Of course, it would be great to get money without having to pay it back, but presenting your plan to pay it back, if that is in the cards, will show a level of responsibility, and let your parents know that you’re not expecting a free gift, but would like the opportunity to do something with their help.
Do you have experience asking your parents to help-out with a home loan and if so, did your parents say yes or no? Tell us about your experience. What worked and what didn’t?
Still Searching for Your Dream Home?
Did your parents says yes!? Great, we are here to help. Even if your parents say no, don’t think that all your options are off the table and you won’t ever be able to buy your dream home. At Hayden Homes, we have homes for sale in communities throughout the Pacific Northwest, and our preferred lenders offer a variety of financing options depending on your situation.