Should You Buy Your Parents' House?

Around 3 to 4% of Americans live in a house that they inherited from a parent, according to a Washington Post article.

That’s not a lot of folks.

The truth is, most people who inherit a house don’t inherit until their 50s, and they usually sell the house right away, because they (and their siblings) already have homes of their own by that time, or because it’s more fair to sell the house and split the money among the heirs.

But what if your parent is still living and actually wants to downsize or relocate? Should you buy your parent’s house?

Are there any financial benefits of doing that? Yes, quite possibly:

• Your parent will likely be willing to sell the house to you at below market value.
• A lower price might enable you to skip the down payment in lieu of the “gift of equity.”
• Your parent(s) can receive cash to move to a more comfortable home.
• And, of course, you don’t have to compete with other buyers if you go this route (although you might want to make sure your siblings are okay with it).

Buying your parents’ house can also be part of a larger strategy to create and maintain generational wealth, especially if your parents purchase another property after selling theirs to you. Then the family owns even more property that can be passed down to the next generations.

In some instances, your parents may even “gift” the property to you instead of selling it to you. That would enable you to refinance the property at a later date and pay off any mortgage that your parents might have left on the property. Alternatively, your parents’ mortgage might be an “assumable” mortgage with a favorable interest rate. If so, you could end up with a real sweetheart deal compared to today’s housing market.

Yet, despite the financial upside of buying your parents’ house, many of us don’t like the idea of spending our adult lives in a house that we’ve known since our youth, or in a neighborhood that we’ve outgrown. You might not want to live in the same state, on the same coast, or even in the same country anymore. There’s a whole big world out there, and buying your parents’ home might make you feel boxed in.

Ultimately, whether to buy your parents’ house can be a complex decision involving financial, lifestyle and family considerations. Talking about it within your Ownerscope circle is a really smart move.

Connect more and own sooner. Ask someone today, "What's Your Ownerscope?"