Dear 100 Hour Board,
(Thanks for taking the time to answer everyone's random questions! I've been lurking the Board for 13 years now, but I think this is only my second question.)
My parents recently offered to help my husband and I purchase our first home, but we're not sure if we should take them up on the offer. By "help purchase" I mean they are going to sell one of their rental properties to put $150k towards a house for us. My parents are fairly well-off, and doing so theoretically would not cause them any financial stress, affect their retirement plans, etc. etc.
I want to say yes, but I can't really figure out why I'm hesitant about it. It would take my husband and I another 1-2 years to save up for a good down payment (plus financial cushion), so it's not like this wouldn't be helpful. And I'm not worried about co-owning a house with them. My husband and I have been discussing it and I think it might be pride? We've both finished graduate school and my husband has a solid job, so it feels like letting my parents help buy a house takes away that next step of "adulting". I don't know all the ins-and-outs of buying a house now, and I feel like they would be handling most of the process here.
My parents' love language is definitely gift/money giving, and over the years my parents have paid for lots of things for my 3 siblings and I (college tuition, household furnishings and appliances, etc.). I don't think any of us kids have kept track of what they've bought for whom, but it's not an equal amount spent per child. I am unofficially the favorite child, and while I wouldn't discuss or brag about this offer to my siblings, I do feel a little guilty about accepting such a large gift. To be fair, one sibling owns his home through financial help from wealthy in-laws, and another owns hers because her husband gets lots of military benefits; the youngest sibling is still in college, but I do think my parents would buy him a condo or something if he needed a place.
What would you do? Why would you accept (or not accept) the offer?
-Don't Look a Gift House in the Mouth?
Dear Gift Horse,
I personally wouldn't accept a gift like that because I wouldn't want the pressure of co-owning a house with my parents. Let me tell you a little story: once upon a time I had a coworker who had very wealthy parents, of whom she was the unofficial favorite child, and they bought her EVERYTHING. When she decided to go to BYU for college her parents bought a house in Orem for her to live in while at college. And I'm not talking about a dumpy little house, I'm talking a lovely 4 bedroom house. She got married (and her parents paid for the very expensive wedding), and her husband moved in with her. They had the best movie nights because they had the best house, but there was a lot of pressure on her from her parents to do things their way. After all, they had paid for her house, her wedding, her tuition, and let her use their credit card whenever she wanted. They told her that they would stop paying for her stuff if she didn't go into dentistry, and so she got stuck in a major she didn't like. They didn't trust her to keep the house up to their standards, and so they hired a maid to clean weekly. Having a maid sounds like it could be nice, but it was actually really embarrassing for her because what college student has a maid? Eventually she and her husband decided to move to a different state so he could go to medical school, and her parents said they would buy a new house for them there. This ended up being a huge source of stress for her, though, because med school was starting very soon and the parents still hadn't found a house they were willing to buy. My coworker was driving to this other state every week to look at houses, and she found a lot that she liked, but none of them were good enough for her parents, so she had to keep driving down every single week to look at more houses, as med school, and the time they needed to have moved to this new state, steadily approached. Her parents eventually found a house they liked and bought it for her, and she loves it. They get to have a a lovely home while in medical school, and don't face the stress of tons of debt accumulating. Instead they face the stress of her parents getting to choose to start months-long renovations projects (because once my friend and her husband are done with med school and move out, this house is going to be the parents' vacation home). For her I guess it's worth it, but personally I wouldn't want to be so much under my parents' thumb. You say you wouldn't mind co-owning a house with your parents, but I think it's important to ask yourself what sorts of expectations they might have for you after buying your house, and if there's anything they would then feel entitled to tell you how to do.
Furthermore, I think there's a big sense of accomplishment that comes with making your own way in the world. I'm not saying that you can never accept help from anyone, because that's an unrealistic way to live, but achieving major accomplishments because you worked hard for them is more worthwhile than just having them handed to you. Other people may disagree with me, but that's what I think.
Personally I would say no, because that's too generous a gift for me to feel comfortable accepting. I wouldn't want to feel indebted to them, and I want a sense of accomplishment for earning it.
However, I still might accept their assistance. For example, rather than saving for a down payment, you could accept a smaller amount from them, maybe like $20,000, that you use as a down payment on a house you can otherwise afford in your own. Personally I would choose to view that as a low-cost loan that I would pay back over time. Or you could accept it as a gift if you feel comfortable with that option.
If you do decide to go through with it, you need to set ground rules about how ownership and everything will go down. Is it a gift, or do they want to be payed back eventually? If so, on what schedule and would you want to pay them interest to ease your conscience? If it is a gift, make sure that you set boundaries with them. You don't want to feel guilty that you painted the guest bedroom a color they hate or do something with the backyard they don't approve of. If it's your house, it's your house.
I completely agree with what the other writers have said about pressure of co-owning a home, wanting to accomplish it yourselves, and feeling like it's a gift with strings attached. I don't know if I'd automatically reject their offer though. There's a few questions I think you should ask yourselves:
- Are your parents the kind to hold gifts over your head? For example, minnow's parents have offered to pay for minnow's MBA but we know they will forever hold it over our heads. ("Why won't you let us stay with you for the next month?? We paid thousands to put minnow through his program!") (You think I'm exaggerating but I'm not.) If your parents have been good about gifting you things and then not bringing it up/holding it over your head, then I'd be more willing to take the money.
- Will you feel guilty about taking this money? It may not be worth the emotional hassle if you will.
- Would they be willing to give you less money and not co-own the house?
- Would they be willing to loan you the money? That way you can get a loan without interest and not co-own the house with them.
Currently minnow and I are borrowing several thousand dollars from minnow's parents. While they offered the money freely, we refused to take it unless it was a loan. For us it's about being more independent and not feeling indebted to minnow's parents. I would probably do the same if his or my parents offered to help us buy a house.
That's a tricky choice to make. Best of luck in making it!
-guppy of doom