More than one-third of Millennials looking to purchase their first home say they plan to rely on a loan or a gift from a relative to cover a key portion of their down payment, according to a recent survey.
And even if your own kids haven't yet asked for a hand, many of them might be considering it. The "Modern Homebuyer" survey from ValueInsured, a company that sells insurance to consumers that pays back their down payments if the value of their home falls, indicates that nearly 60% of Millennials looking to buy their first home aren't confident they can afford to do so.
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So if your adult children could use some help buying their new digs, should you reach into your savings — retirement or otherwise — to help them out?
The answer, as usual, when it comes to issues of personal finance — is, well, personal. But here are some guidelines you can follow:
When It's a Bad Idea...
If you are a middle-income earner. "A middle income earner, despite their best intentions, should not support their child's purchase of a home if it means sacrificing contributions to their retirement," says Jacob I. Milder, CFP, at Oak Street Investments in Denver. If opportunities still exist to contribute to a 401(k), 403(b), or IRA, loaning money would mean decrease these contributions, he says.