Are your parents going into retirement? Are they still residing in that same big house that you lived in growing up? Are they considering downsizing? This is easy to say than to do, right? You see, moving from a house that you lived in for years will often come with emotional attachment and possibly financial challenges, not to mention the considerable about of stuff that is accumulated over the years.
The Financial Situation
You can do your loved ones good by helping them to make the transition into a new home, however you may need to provide financial help. Because most individuals who are retired are living on a small or fixed income, they might not be able to meet the strict mortgage lending standards, although you’re never too old for a mortgage
and it’s illegal for lender to discriminate based on age. There are other options. You could consider selling their current home and using the acquired funds to buy a smaller home, co-sign on the mortgage or rent the property to your parents. Either way, your assistance will be truly appreciated.
The Financial Solution
You could also offer to help with the down payment on the new home. However, your loved one would have to qualify for the mortgage loan, unless you wanted to be a co-signer, which is allowed by most mortgage lenders. You could also purchase the home outright for your parents to live in. You could purchase the home as an investment and have your parents pay a small rent. Let’s review the options below.
1. Buying the Home
If you were to purchase the Denver home outright, you could consider renting it to your parents for a small fee. Property in Denver is hot right now and this would be a good alternative to paying a high rent to an apartment complex. You will reap significant tax benefits if you chose this arrangement. You would be able to deduct property taxes and mortgage interest. However, with this additional expense, you could see a dent in your budget and in
your retirement savings. Consider long term savings objectives before making a final decision to purchase a home outright for your parents.
You could opt for cosigning on a loan with your parents. This could be the more recommended option since you don’t have to use your own money and could still keep your retirement savings intact. Your parents may actually prefer this particular option. However, if your parents were to miss a payment, you would be still responsible for payment. It could eventually damage your credit rating, if it gets out of hand. Open up a joint account with your parents so you can arrange for automatic payments on their mortgage each month.
3. Rental Property
For a lot of families, a rental property could be a win-win situation. You enjoy the benefit of being a landlord and having trustworthy and honest tenants. You also acquire equity in your investment property over time. Your parents will have a place to live while not having to be burdened by the thought of eviction, if they fell behind in payments.
There are a lot of smaller homes for sale in Denver, Colorado. If you are ready to help your parents to downsize there are many amazing neighborhoods to choose from including Observatory Park, Lowry Field, Montclair, University Park, Goldsmith, Hilltop and Hale to name a few. Contact Elevation Realty
today at 303-579-3566. We are the Denver real estate experts you can count on.