How do you ask a question when no one wants to talk about the subject? Often, it’s quite clumsily, without much effort at sparking an honest exchange.
That’s what Dave Hardin, of Hardin Financial Group in Troy, Mich., has observed after working with parents whose adult children have asked for money to assist with a down payment for a home purchase.
“It is so important to be careful when thinking about asking your parents for help,” Hardin says. “Many parents are unable to be honest with their children about their own financial situation … We often see parents spending down their retirement funds.”
Money may be a sensitive topic, but necessity has driven many to ask, with first-time buyers since the recession began circa 2008 twice as likely to receive down payment help from family and friends than those who bought before, according to a report from Zillow’s Aaron Terrazas, a senior economist for the real estate company.
What’s more, high rents, still-tight credit availability and student debt have combined to make down-payment assistance key to struggling buyers, notes Terrazas.
Before asking, hopeful buyers should investigate options, says David Reiss, a real estate professor at The Brooklyn Law School.
“You would want to press your lenders to identify all first-time homebuyer programs you might be eligible for,” Reiss suggests. The Federal Housing Administration offers loans with low down payments, and many state housing finance agencies offer low or no-down loans to eligible buyers, he notes.
In any case, says Reiss, “It would be helpful to know your options when speaking with family members about a gift.
“They might be willing to give a smaller gift for an FHA mortgage, or they might be willing to make a larger gift if they see that it would result in lower monthly payments for you,” Reiss says
“And, the mere fact you did this type of research is evidence that you are a financially responsible adult,” he concludes.
— Marilyn Kennedy Melia
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