There are many ways parents can help their children buy a home: contributing to a down payment, helping with closings costs, co-signing a mortgage or allowing their kids to move back home so they can save money, among others.
Most involve giving their children money, and deciding where that money should come from is an important decision. For parents nearing retirement, pulling money from a savings account or a 401(k) retirement account can be problematic if they’re going to need the money to retire.
Without it, they could end up moving into the house they helped their children buy.
A poll by loanDepot.com found that more parents are planning to help their Millennial-generation children buy their first home. Sixty-seven percent said they planned to pull the money from their savings account.
Here are the percentage of poll respondents who planned to use other sources of parental support:
- Refinancing their own home: 8%
- Taking out an unsecured personal loan: 8%
- Selling equities: 5%
- Borrow from 401(k): 4%
- Sell primary home: 2%
For the parents who do pull money from their savings account to help with a down payment, there’s some disagreement with their children over whether the financial support is a gift, loan, inheritance or something else, the poll found.