 What with the job market so tough and the ever increasing cost of living, how do you kids afford to buy a home? It's darn near impossible, unless you scrimp and save through your 20's (who wants to live off Top Ramen?), or live w/ parents to save on rent (Social/sex life tanks!) or if you're a trust fund baby (Jealous!).
CNN Money spotlights 5 scenarios where parents help kids buy homes, ranging from paying out right in cash to lending money to their kids interest free. I've noticed this trend in the market, especially in more pricey areas like San Francisco, whose average sales prices is near $700k. Do you think this is a function of Baby Boomer spoiling adults kids? Or wise investment decision for their kids?
10 Comments
Richard
12/12/2011 01:19:48 am
Not sure how much it spoils the kids but as a mortgage lender I can share that it seems most of the kid's who are getting large "gifts" from the parents tend to be the more spoiled/entitled types. One story: a young woman fresh off her MBA was buying a pricey condo in Pacific Heights back around 3-4 years ago. Daddy (a doctor) was giving her the whole 20% down payment as a gift (though from hints the daughter made it was more a loan for sure). The daughter did seem a low risk as the time. An MBA from Stanford, worked for part-time for Merrill or Goldman each summer during business school and during her MBA. She was now in a new job with ML in their big bond dept after finished her MBA. Her salary was about $80k but will the potential of huge bonuses if you looked at others in her position at ML at that time. Daddy got all persnickety and upset at me when we needed bank statement documentation of where the "gift" funds were coming from. "I cannot believe all this documentation requirements! You do know my daughter will be making over a million $ a year soon don't you?" The attitude and pretentiousness of the parties involves was like this the whole loan process. Long story short (too late?): Daughter called me a year or so ago desperately wanting to refi or modify her loan as ML had laid her off and should could not find another job anywhere. She eventually sold at about a 15-20% loss to her purchase price. There goes Daddy's "gift"...
Lisa
4/13/2012 10:22:29 am
Add this to the recent news about spending $1000 on a prom, of all things and you're scratching your head.
Herman
4/13/2012 10:34:32 am
Lisa 5/3/2012 03:12:57 pm
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Parents need to understand the requirement of there kids and they nature the they provide them a facility. 7/27/2012 01:27:03 am
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Although I would’ve preferred if you went into a little bit more detail, I still got the gist of what you meant. I agree with it. It might not be a popular idea, but it makes sense. 9/21/2012 08:57:21 am
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