Foundations for the Future: A Parent's Guide to Preparing Kids for Property Ownership with David Frankel
Planning for the future is hard, and teaching kids how to plan for the future is even harder! In this episode, Cecile talks to David Frankel of Guaranteed Rate about how to prepare your children so they are able to purchase property after college. From the first steps of educating them about money and finances when they’re young, to cosigning and gift money, we have all the answers!
When to start talking to your kids about real estate
You can start talking to your kids about financing pretty early! Simple things like taking them to the grocery store with you or letting them see the bills gives them a sense of what money is. If your kids are a little bit older and you’re looking at buying a house yourself, get them involved so they get a sense of what the process looks like.
the first things to consider when buying
The most important considerations are income, debt, credit, and assets. These are the four building blocks for an applicant’s profile for a loan. Credit cards, student loans, and car payments are great ways for students to build credit. Debt looks at the percentage of one's income that goes towards monthly obligations (like credit cards, student loans, and car payments). Assets pertain to any money that might go towards your down payment and closing costs like checking accounts, savings accounts, bonds, and gift funds. Lastly, you’ll need to have some form of employment and documented income that shows you’ll be able to repay your loan.
How does gift money work?
Gift money from eligible donors may make up to 100% of a buyer's out of pocket costs for down payment and closing! Gift funds can come from a blood relative, an employer, or someone with a family-type relationship. You may not use gift funds for an investment property.
Cosigning on the loan
If your child doesn’t have quite enough income on paper yet, another great option is cosigning the loan with them. Cosigning states that you will pick up any financial slack necessary to keep them current on their loans. You do not need to be on the title to cosign.
Have more questions about preparing your kids for homeownership or ready to get started? Contact David Frankel today to discuss your options.
