We are approaching the end of the year, yup, Q3 is just about over, and then the year winds down with
Q4.  Did you know that there might be a way to find some much needed money to buy a house with the help of your family?   If you have the income to pay a monthly mortgage on a house plus the insurance and taxes but don’t quite have enough cash to put 20% down, read on.

We are looking at a mortgage industry today that is beginning to operating the way it used to in days long

Running on a treadmill

ago.  Once upon a time you needed to have a down payment of at least 20% and a debt ratio of no more than than 36%.  In our area that is very hard to come by today unless your options are ready to cash in.  So you might have the cash but don’t have the debt ratio.  Or perhaps it’s the other way around.  Our housing prices aren’t dropping at the high end so if you are trying to save you might feel like you’re on a treadmill that is just a little behind the increase in pricing.  If you’re looking to buy an entry level house there is plenty to pick from and negotiate price over.  But that doesn’t change the need for 20% cash for your down payment.

What to do?  If your parents are financially able, they can each gift you (and your spouse) $11,000 every year and it is tax free. Since we’re nearing the end of the year, a gift like that could instantly give you both $44,000 in cash towards that 20% down in this year, plus another $44,000 tax free in January.  That’s $88,000 between now and the beginning of January.  Okay, how did I get that number?  Mom gifts you and your spouse $11,000 each. That equals $22,000.  Dad does the same.  That now equals $44,000.  Do it anytime between now and December 25 because the check must be cashed prior to December 31.  They repeat this again on January 1 and voila, $88,000.  If you are lucky enough to have both sets of parents financially able to do the same thing,  you can do the math.

Money, money, money

Add that tax free gift from your parents to any other funds you have and
you just might have found yourself with 20% of the price of a new home.  This is something your parents can do annually if they have the income.  The donor gets no income tax deduction and the recipient, you, pay no taxes on the money.  Want more information on this?  Marc Weissman, a Certified Specialist in Estate Planning, Trust and Probate Law can provide it.  You can read more
about this here.