RunningBum
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jun 18, 2007
- Messages
- 13,236
My son is considering his first home purchase, and I'd like to help him if he does. He has enough saved up for a 5-10% down payment, and he probably could qualify for a mortgage for a pretty cheap home in his area, but neither of us want him to get a dump or live in a bad area. I'd rather he get into a house he'd be happy with for the longer term.
I know there are pitfalls with giving this kind of help, but I don't want to get into that. I am considering all that, and have people who know the situation to bounce this off of. I'm not going to get into all the details here and without that information the advice isn't likely to be useful. So, please, don't derail my question and go down that path. Let's just assume that I'm going to help.
I see two options here:
1) Co-sign a mortgage with him. I would probably do something like match his down payment and loan payments. There's some question of how much I can help on the mortgage qualification since I'm retired, but between my assets and ~$48,000 income on my last few 1040s it'd probably be enough.
2) Gift him enough of a down payment to reduce the mortgage he can qualify for. This would almost certainly be more than the $15,000 you can do without paper work. It would eat into the estate exemption, but my estate is unlikely to come anywhere near the $11M limit.
Some of the factors:
I'd rather not outlay too much cash, so putting me on the mortgage (#1) helps.
If, God forbid, he should die before me, buying the house together as JTWROS, the house would go to me. I like that a lot better than gifting him a large chunk, then seeing it go to my ex- or his half sisters. Obviously he could give me the house in his will (I don't think he has a will yet), but there's a simplicity in JTWROS.
I'm not sure what kind of help Virginia gives for first-time home buyers, and whether that is impacted by me (a current home owner) being on the mortgage and deed.
If/when he ever sells that house, he would have a $250K exemption on the gain. I would not for my half. That's a pretty big advantage for #2.
Are there other options available, and any other factors that would sway me to one or the other?
Again, let's please not get into the question of whether I should be helping this much.
I know there are pitfalls with giving this kind of help, but I don't want to get into that. I am considering all that, and have people who know the situation to bounce this off of. I'm not going to get into all the details here and without that information the advice isn't likely to be useful. So, please, don't derail my question and go down that path. Let's just assume that I'm going to help.
I see two options here:
1) Co-sign a mortgage with him. I would probably do something like match his down payment and loan payments. There's some question of how much I can help on the mortgage qualification since I'm retired, but between my assets and ~$48,000 income on my last few 1040s it'd probably be enough.
2) Gift him enough of a down payment to reduce the mortgage he can qualify for. This would almost certainly be more than the $15,000 you can do without paper work. It would eat into the estate exemption, but my estate is unlikely to come anywhere near the $11M limit.
Some of the factors:
I'd rather not outlay too much cash, so putting me on the mortgage (#1) helps.
If, God forbid, he should die before me, buying the house together as JTWROS, the house would go to me. I like that a lot better than gifting him a large chunk, then seeing it go to my ex- or his half sisters. Obviously he could give me the house in his will (I don't think he has a will yet), but there's a simplicity in JTWROS.
I'm not sure what kind of help Virginia gives for first-time home buyers, and whether that is impacted by me (a current home owner) being on the mortgage and deed.
If/when he ever sells that house, he would have a $250K exemption on the gain. I would not for my half. That's a pretty big advantage for #2.
Are there other options available, and any other factors that would sway me to one or the other?
Again, let's please not get into the question of whether I should be helping this much.