With less homes to choose from, buyers must make good offers and move quickly. They may end up paying more for the home they really want. How does that make this a good time to buy?
We still have those low interest rates and parents know it.
The low interest rates we currently have make a huge difference in the affordability of the monthly payment – your purchase price is just part of the picture. If the home price is higher but the interest rate is lower, you may still come out ahead. There has been talk that the interest rates will soon rise and this adds more urgency to those who are aware of the affect interest rates have on the monthly payment. This includes the millions of people, maybe including the new homeowner’s parents, who have bought homes when interest rates were well above 10%.
“Move on this, kids”
In a detailed article about Milwaukee real estate sales during March 2015 in the Milwaukee Journal Sentinel, Mike Ruzicka of the Greater Milwaukee Association of REALTORS is quoted saying: “There’s a whole generation of people that hasn’t seen interest rates over 5%, and their parents and grandparents are saying, ‘Hey, you need to move on this now.'”
Parents realize that now would be a great time to help their millennial children become homeowners and they are willing to help make that happen in a variety of ways. A study from loanDepot LLC reported in Real Estate Economy Watch indicates that the number of parents who expect to provide assistance to their millennial-aged children will increase by 31% compared with the last five years. Half of those parents say the help will come in the form of downpayment assistance, 20% will cover closing costs and 20% will cosign.
Whatever is decided between parent and child is fine and what a gift it is to be able to help a child achieve homeownership, the path to building wealth. Keep in mind that financial assistance may need to be disclosed with a gift letter or other document when applying for a home loan.
“Move on this, kids!”
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