Helping your kids buy a home is just as important as helping them get a good education. This story is about how we helped our two daughters buy a home before age 25. Our older daughter and her husband are now 28 & 29. They graduated from PSU in 2013 & 14. Because we are Realtors, and they have to listen to us (hahaha), they bought a house in September of 2014. Using only one income (together they made too much money) they qualified for a Key Bank First Time Homebuyer Program with zero down and NO mortgage insurance. We spent months looking for the right mix of location and fixer-upper. The house they bought cost $250,000 and needed about $10,000 in immediate updates. We paid all the loan and inspections costs, and the in-laws paid the update costs. There was a lot of free labor from all the family members.
Over the years they fixed it up and last Spring decided it was time to sell and move to Vancouver which is closer to work. After spending $20,000 to finish projects and add some enhancements to the house, it was almost ready to sell. The Room Stylers in Tigard (Angie) came in to help de-clutter and staged it just right. Professional photos were taken by RETO (the only photography company I use) creating the perfect first-time buyer home. We priced it right at $399,000, held an open house on a Tuesday, and got three offers by late Tuesday night. It closed last Monday for $411,000. The kids made about $120,000 after factoring in the cost of selling and estimating they had spent about $30,000 on the house from start to finish. This is more than enough to make a 20% down payment on the new home. OK, they did get a little discount on the Real Estate commission and some help on their closing costs from Mom & Dad, but we all still made a great return on investment.
It’s a great story and the most important part is going back to the beginning. First, they were just out of college but had both established a credit history early in life (High School). Second, they had no debt. And third, they used a first time home buyer, income bracketed loan, that allowed them to buy with no down payment needed. But to compare this scenario; “what if” they had waited until they could save 5%, 10%, or 20% down to buy that first house? Rents keep going up and they would have barely stayed ahead of the curve. Chances are they would have accumulated consumer debt. As homeowners, they had a fixed payment for 5 years (just $1620/mo). With Rent, you can expect an increase every year. Oh, and that $120,000 in appreciation would have been in someone else’s bank account.
Our younger daughter and her now-husband bought their first house last Summer. At 24 they didn’t have a lot of cash saved but did have excellent credit. We found a great deal on a home ($320,000) that had been foreclosed on but was in excellent condition. They were able to get a 3% down conventional loan at a 5% interest rate. Both parents chipped in $5,000 to cover the down payment. We were able to get the seller to pay most of the closing costs. One year later they are refinancing their loan because interest rates are down to 3.5%. This lowers the monthly payment by $300. Their monthly mortgage insurance will also be reduced because the home is worth about $20,000 more than they paid for it.
Do you know someone just getting started, recently got their first professional job, or just need to get out of the rental rut? Send them to us and the great lenders we work with. Sometimes all they need is a little financial help from you. Buying is cheaper than renting when you look at the long-term view. So why not help your kids to buy a home?