{"id":12628,"date":"2019-06-02T11:11:48","date_gmt":"2019-06-02T18:11:48","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=12628"},"modified":"2019-05-17T09:44:47","modified_gmt":"2019-05-17T16:44:47","slug":"crucial-things-to-consider-for-parents-helping-the-children-become-homeowners","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/06\/crucial-things-to-consider-for-parents-helping-the-children-become-homeowners\/","title":{"rendered":"Crucial Things to Consider for Parents Helping the Children Become Homeowners"},"content":{"rendered":"<p style=\"text-align: justify;\">As the bank of mom and dad\u2019s popularity shows nary a sign of abating, there are crucial things for parents helping their children become homeowners to consider.<\/p>\n<p style=\"text-align: justify;\">Chief among them, says Jason Davenport, branch manager of Meridian Credit Union Greektown location in Toronto, is the legal obligation\u2014specifically whether or not parents are gifting or loaning their child money.<\/p>\n<p style=\"text-align: justify;\">\u201cIf it\u2019s a gift, most financial institutions require a gift letter,\u201d he said. \u201cThat\u2019s important if things break down before the house gets sold. If it\u2019s a loan, the money can be secured against the house often in second position, if mom and dad are worried about that.<\/p>\n<p style=\"text-align: justify;\">\u201cIf it\u2019s a matrimonial home and the excited parents give them a gift, but the marriage breaks down, then the gift becomes part of the home\u2019s equity and there\u2019s no way to recover it. You\u2019re going to lose half of those funds to the other party. But if you want to guard against that, you could create a loan and put a lean against the house. If the marriage breaks down and the house is sold, after the bank takes its share from the remaining equity, you can recoup those funds. But, without anything like that, for all intents and purposes, that money is gone for the parents.\u201d<\/p>\n<p style=\"text-align: justify;\">Mom and dad also have to be cognizant of not overextending themselves and compromising their retirement. Davenport warns that spending such a big chunk of their money could jeopardize investment goals and even much-needed renovations in their own home. In the B-20 mortgage qualification era, that\u2019s a real possibility.<\/p>\n<p style=\"text-align: justify;\">\u201cIf you\u2019re helping your kids buy a new home, getting another individual on the title\u2014like mom or dad\u2014as a guarantor or co-signer is an option, but there are different responsibilities,\u201d explained Davenport. \u201cA co-signer on the property\u2019s title is 100% responsible for other people should anything happen, and if they refuse or can\u2019t pay, the co-signer is 100% responsible for the property. They\u2019re on the hook.\u201d<\/p>\n<p style=\"text-align: justify;\">A guarantor doesn\u2019t go on title, but there\u2019s no recourse should anything happen to the home. There\u2019s still another catch, though.<\/p>\n<p style=\"text-align: justify;\">\u201cThey\u2019re still 100% responsible for payments, again, should anything happen to the home. It\u2019s most likely we\u2019d go to them if payments are required.\u201d<\/p>\n<p style=\"text-align: justify;\">Foresight is the name of the game, says Davenport. In the event of tragedy or a dissolved marriage, planning ahead prevents a lot of headaches, and even heartache, later. Davenport says that more important than money is the relationship between parents and their children.<\/p>\n<p style=\"text-align: justify;\">\u201cMake sure you run the numbers before making any decisions,\u201d he said. \u201cIndividuals with greater assets should think about an inheritance later versus a gift now. If they\u2019re thinking about what their estate will look like, taxation is part of the equation because you pay a big chunk. If you want to get around it, you can confront the tax liability now, meaning you can incur the liability now for whatever it will be on the inheritance later and the end result is you\u2019d more than likely be net ahead for the estate. Sometimes giving money to your kids before you get to that point can have a positive result on what you want for your estate.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.canadianrealestatemagazine.ca\/news\/things-to-consider-when-helping-children-buy-a-home-257459.aspx\" target=\"_blank\" rel=\"noopener noreferrer\">Things to Consider When Helping Children Buy A Home<\/a> by Neil Sharma | Canadian Real Estate Wealth<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the bank of mom and dad\u2019s popularity shows nary a sign of abating, there are crucial things for parents helping their children become homeowners to consider. Chief among them, &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/06\/crucial-things-to-consider-for-parents-helping-the-children-become-homeowners\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-12628","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Crucial Things to Consider for Parents Helping the Children Become Homeowners &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2019\/06\/crucial-things-to-consider-for-parents-helping-the-children-become-homeowners\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Crucial Things to Consider for Parents Helping the Children Become Homeowners &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"As the bank of mom and dad\u2019s popularity shows nary a sign of abating, there are crucial things for parents helping their children become homeowners to consider. 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