Lew Sichelman

Parents can take a number of steps to help their offspring purchase their first homes. They can donate money for a down payment, co-sign on a mortgage or pay off their student loans. 

But Mom and Dad also can get in the way. For one thing, they can offer advice that was sound when they bought their own house years ago, but no longer holds water in todays market. And they can insert themselves into the entire process, instead of letting Junior or Missy make their own decisions. 

But worst of all, said Massachusetts real estate pro Dana Bull, well-intentioned parents can steamroll all their childrens ideas. 

Parents’ Disapproval Stops Deals 

Its not that adult children dont want their parents input and advice  they do, said Bull, who hangs her shingle with Sagan Harborside, a Sothebys International Realty franchise. But all too often, she said, parents end up overstepping their bounds. 

Bull was 22 and working in the architectural field when she bought her first place, a condominium apartment in a circa-1784 house, with her then-boyfriend (now husband). Her parents didnt approve: They had always purchased new homes, and worried that their daughter was making a big mistake buying such an old place. 

They were apprehensive, Bull recalls. They were concerned that the old structure could have plumbing and electrical issues, and that I was making such a major decision at such a young age. They also were anxious about the fact that my boyfriend and I were buying together: What if things between us went south? 

The couple went on to buy a number of properties together, and at age 25, she transitioned full-time into real estate. Now 30, she works with a lot of younger buyers, and said she often feels like a therapist when their parents become too involved. 

She sees it mostly when Mom and Dad tag along during house-hunting outings, and again during the home inspection. 

The kids may love the house, but if the parents dont approve, the kids freeze. All they really want is their parents approval, Bull saidThe parents have good intentions, but their kids are adults who know what they want and they are fully capable of making their own decisions. 

What Parents Are Good At 

As Bull sees it, the best thing parents can do is to provide a framework so their children can make sound decisions. 

Parents need to realize that certain things are beyond their level of expertise, Bull advises.  

“If parents are going to help their children financially, they should start with high-interest debt that might be accrued during and after college.”
—Thomas O’Shaughnessy, head of research, Clever Real Estate 

They are far better off suggesting that the kids find experts in their respective fields,” she said.  

That means urging them to build a good team of real estate professionals, starting with their choice of agents and including solid, trustworthy lenders, home inspectors and possibly even lawyers. 

Having the right people who can advocate on your behalf about the things you and your parents dont know much about is key, Bull saidYoung buyers love the idea of Dad coming along on the home inspection, and they value his opinion. But the real expert is the professional. 

Stepping back isnt easy for some parents, who often fear their adult children will make the same mistakes they did. But thats the way kids of any age learn  just the way Mom and Dad did. Still, if you want to be in the picture  and are asked to be  then be involved from the get-go, Bull suggests.  

Asking Why didnt you think about this or that? isnt helpful, especially in the middle of the process,” she said. “If you want to be part of the journey, do so from the beginning. 

Student Debt Help Is Best 

There are any number of ways parents can help their children. But co-signing on a loan isnt the best choice: If your name is on the mortgage, you are just as liable for the payments as your children. Consequently, if they should falter, youll have to make the payments, or your credit will be impacted. 

If you can afford it, a monetary gift to help with or cover the entire down payment is a better option. But dont make it a loan, even secretively. The lender will want a complete paper trail of where the money came from, and the borrower will have to state in writing that the money need not be paid back. 

Far and away the best thing you can do for your children is to be sure they pay off their high-interest debt as quickly as possible before they even think about buying a house. 

If parents are going to help their children financially, they should start with high-interest debt that might be accrued during and after college, said Thomas OShaughnessy, head of research at Clever Real Estate, a nationwide referral service that connects consumers to agents. 

Clevers research shows that 48 percent of undergraduates with student debt plan to delay homeownership by seven years. Moreover, they are eight times more likely to add a personal loan to their debt load, and seven times more likely to be using high-interest credit cards at the same time. 

Worse, perhaps, 56 percent of college students dont know the interest rates on their student loans. And most college students underestimate, by five years, how long it will take to pay off that debt. 

So, while parents can help their children with some or all of their down payment or by joining them on a mortgage, OShaughnessy advises, they are far better off being certain the kids are in a financially stable place to afford their monthly mortgage payments. 

Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com. 

Parents Can Hurt More than Help Young Homebuyers

by Lew Sichelman time to read: 4 min