Homes for Christmas

When it comes to the question of what to buy the kids for Christmas, many baby boomers are buying homes for Christmas presents and giving them to their adult children.  It’s a new trend that’s being noticed all over the country.  Not only are they buying these elaborate gifts around the holidays, but year-round.  They are either buying it outright or helping out with the down payment.  Many are even co-signing for the loan according to a survey completed by Better Homes and Gardens.
Real estate agents around the country are also witnessing this trend that got stronger as the result of a struggling housing market.  More than two-thirds of the baby boomers surveyed said they expect to provide financial support to their children or grandchildren in the future to enable them to be home owners, too.
Of course parents want to see their kids in a stable living environment and while property values are way down it’s easier for them to help out.  Homes in markets in many areas of the nation haven’t been this reasonable since the late 1990’s and with low interest rates, buying a home is even more affordable.
In some cases, you may need 20% down to get a favorable mortgage, and for a medium priced home at $160,000 that’s $32,000 upfront, which most young buyers don’t have in their savings.  Young buyers are also faced with getting approval for their loans because they have the wrong kind of income.  Those who are freelancing or have-part time jobs are considered unpredictable to lenders.  Lenders prefer steady paychecks from employers.
Sometimes it can be a good thing when parents get involved in helping out, but it could quickly turn into a bad thing.  Parents should consider how much help they can realistically provide when involving their own budget or retirement plans.  Parents should also ask themselves what their child can afford on their own, and if they will be able to pay their monthly bills without further assistance. 

So, if you’re a baby boomer that is thinking about buying a home for your child or assisting them with the purchase of a home, you should keep these few tips in mind. The rule of thumb in real estate is housing costs should not exceed 28% of the gross income.  That includes monthly mortgage and utilities. If they have other debts like student loans or car loans, you should also factor that in to not exceed 36% of their income.  Another thing to consider is the upkeep of the home.  At some point the roof will leak, pipes will bust, and appliances will stop working.  All those items will need to be repaired right away and all homeowners need to have a budget for fixing them.

 

Originally posted at: http://activerain.com/blogsview/2645360/homes-for-christmas