first time homebuyers

Helping Children Become First-Time Columbia SC Homebuyers

Young, first-time Columbia SC homebuyers are becoming an increasingly rare site these days in the housing market.

According to the Census Bureau, the homeownership rate for the 35-and-under crowd fell to a 22-year low in the second quarter. This has some parents wondering whether they can, or should, help their kids buy a home.

Should You Help Children Become First-Time Columbia SC Homebuyers?

Many first-time Columbia SC homebuyers are getting help from their parents

Parents have helped their children for decades with down payments and even loans. But recent economic and mortgage-market realities have made the question more acute. Whether you should step in is a question only parents can answer. Here are some considerations if you do decide to help.

Down Payment Assistance:

There are potential tax implications to consider. Individuals can currently make tax-free gifts of up to $14,000 per recipient. That means Mom and Dad could give as much as $56,000 to their child and a spouse before hitting the IRS's annual cap on tax-free giving. Make sure your child is married to qualify for that limit. Live in boyfriends/girlfriends don't qualify.

Anything above those limits requires reporting to the IRS. But you can certainly give more. The good news is you won't have to pay taxes until you bust through the lifetime gift exclusion, which now sits at $5.34 million, well above most people's worry limit.

Lenders will have specific guidelines for how to document and source gift funds. They'll also want to see in writing that this is a "no strings attached" donation, and not a loan to be repaid.

Depending on the type of loan and gift amount, children may need to contribute some of their own money to the cause to become first-time Columbia SC homebuyers.

Co-Signing:

Parents can also co-sign on a mortgage with their child, although we don't recommend it. Some loan types, like VA home loans, have occupancy restrictions, but there are plenty of options for co-borrowers who don't actually plan to live in the property full time.

Helping with a down payment is one thing. Co-signing on a loan exposes parents to significantly more risk when it comes to their credit and financial profile. A child who misses a mortgage payment or winds up in default could wreck their parents' credit for years.

No one expects to lose a job, get divorced or face some medical crisis. Anything that affects your child's ability to make good on their obligation means the full responsibility falls to you. That may or may not be financially feasible for some parents.

Parents as the Lender:

Parents with the liquidity for an all-cash purchase can opt to draw up their own mortgage and repayment plan, likely with the help of an attorney and a financial planner.

There are federal guidelines regarding interest rates on loans like this, which is all the more reason to consult financial and legal experts. This kind of arrangement can generate interest income for parents, while getting kids into a loan with a lower rate than they'll ever find on the market. It could be the only way for the children to become first-time Columbia SC homebuyers.

The Simplest Approach:

Although not necessarily feasible, paying all-cash is certainly the simplest way to go. No credit review, no checking where the down payment came from. All cash sales accounted for almost a third of all home purchases in June.

No matter which route you take, if helping your children become first-time Columbia SC homebuyers, we strongly recommend you seek legal counsel and advice when structuring any agreements.

Check out some of our other articles on becoming first-time Columbia SC homebuyers by clicking the Columbia SC Home Buying Tips link to your right under our Columbia SC Real Estate Categories.

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Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Beginner Tips On Buying Homes For Sale

When it comes to looking at homes for sale, many first-time buyers often find the task as one that can be both exciting and generally overwhelming. Keep a few things in mind both before and during your search, which may help you to narrow things down and could potentially provide better results.

Think about how much you can afford in the scheme of things and long before you start looking. Many people tend to go for the entire loan or what they may qualify for, even if they can’t really afford it in the end. It’s also important to think about other outside expenses you also have under your belt, not to mention new ones that may occur after your purchase such as taxes, HOA fees and so on.

Many people forget to take into consideration what expenses they may currently have, not to mention ones that may impact them after their purchase of a home. Make sure you factor in current expenses you might have. You should also add whatever expense you’ll have with your new home, based on the future mortgage, and any expense associated with the mortgage.

Figure out what will be reasonable for you in the long run, particularly when it comes to your mortgage and key elements such as space and other factors you’ll need in your new home. Setting a budget for yourself and then aiming to stick to houses that meet this price range can often help to avoid the hassle of being tempted by unrealistic houses or homes out of your price range.

It’s good to write up a list of things you’ll need, would like to have, or don’t wish to see. Space is also important, as well as whether or not you’re wanting something that’s detached or something that’s fairly easy to keep up with and maintain.

Things on your list should generally start with the basics. For example, think about how many bedrooms you need, if you’re OK living wall-to-wall with neighbors, if you need a back yard or one that’s fenced, etc. If you prefer on-site laundry or other amenities, then these are good to think about as well.

It’s also crucial to ensure that your expectations are also realistic. If you’re on a strict or low budget and have a desire to live in a popular and likely expensive neighborhood, then you may have to go with a smaller residence or choose to move to a different place in order to get a larger-sized one.

In the end, speaking with a professional agent about homes for sale can often be a great way to gain further help and insight. Many of them have a good idea as to what’s out there, and they may even be able to locate hard-to-find deals that could potentially be in your favor. However, planning ahead can be a great way to help them find what you’re looking for.

If you have questions or comments about these tips for buying a home, please comment below. We’d love to hear from you.

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Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.