Hal's Mortgage Blog

Let's say you are thinking of buying a home. You have part of the down payment saved up and enough money for the closing costs. Should you tap the "Bank of Mom and Dad" to complete the money that you will need? Not many people would think of asking their parents for help right off the bat, but if you ask your parents correctly, this could be the help you'll need in finally being able to secure the house of your dreams.

 
How exactly do you ask your parents for the money that you need without coming across negatively? Here are a few handy tips:

Don't ask over the phone - The worst thing you could do is to call them up or (gasp) send them an email or text message that you want to borrow money in order to be able to buy a house. The least you could do is visit your parents and get up enough courage to ask them in person. Of course, it's also a lot harder to reject your request if you ask them in person rather than if you're not there personally. Explain the situation to them in detail so that they understand your financial situation and have more confidence that you just need a leg up, and that this won't necessarily be all on their shoulders instead of yours.

 
Show a preapproval letter - Show your parents that you've been preapproved for a mortgage already but you just need help to seal the deal with the lender. The lender has already done underwriting on your mortgage and determined that you can pay off the loan. If the lender has faith in you, there's no reason why your parents shouldn't have faith in you either.

 
Ask them to come with you when you look at homes. That way, they can give constructive advice and also feel that they are involved in some part of your life. Parents like to feel significant, even though their children are already grown up.

 
Gifts are tax free - Well, each parent can make a cash gift to their child without having to pay gift tax on it. There's a limit to that, however, and it's better to consult a tax accountant to ask about the limit and how to declare it.

Looking for other ways to come up with down payment money? Call or email me for 18 Sources for your Down Payment and Closing Costs