With the new economy, and the fact that many children are never going to reach the same kind of financial success their parents have, one way to help families work together to on buying a home is to have a thing called “shared equity”.
A shared equity arrangement means that you actually own part of the equity in your home with another person. That could be with another partner, your child or grandchild, or nice, or cousin, or whomever.
You help them with their down payment, and their monthly mortgage payment and other expenses.
Basically, the arrangement can be structured many different ways. One way is when you put up the down payment, and then you own half the home. Your child is responsible for paying the monthly mortgage, taxes, insurance etc. And. At some point down the road, they will buy you out when the property has appreciated, or they’ve saved up more money so they can pay you back.
We won’t go into all the tax aspects of this right now, but it can be a very beneficial situation for you and your family members.
Your children can get home ownership tax benefits, help with a loan approval because of you being involved in the home, and they can get in with a low down payment or no down payment and also share in the appreciation.
You can get a real estate investment with no vacancies, possible lower down payment that you’d have on an investment property, a good tenant, and all the tax savings benefits that are available to you with any investment property.
If you’d like more information about shared equity, we’d be glad to discuss it with you, because there are many different ways that a situation like that can be arranged.