HELP FROM PARENTS

HELP FROM PARENTS

Some advice

Many midlife couples are glad to help offspring with down payments for their first houses, said Melissa Eckstein, a certified financial planner with MPC Financial Services in Brookfield, Wis. But that’s only a good idea if it doesn’t rob them of savings they need for their looming retirement. Here are some tips she gives clients in this situation:

Know that the mortgage lender will require documentation that the gift is a gift, and not a loan in disguise.

Don’t co-sign for the kids’ mortgage.

Require the buyers to have an emergency fund to cover repairs and an interruption of income. It’s best to set aside at least three months of household carrying cost. That will prevent a run on the Bank of Daddy.

Key lending ratios for first-time borrowers:

Total debt — including student loans — shouldn’t exceed 50 percent of gross monthly income. That includes property taxes and insurance.

Total housing payments — including property taxes and insurance — shouldn’t exceed 34 percent of gross monthly income.