Helping kids out with down payment on first house.

We would like to lend out kids $20,000.00 as a down payment on their first home so that they can get the best mortgage rate. My husband and I have a $260,000 mortgage on our $500,000 home. We also have a 401K but my husband says we would get taxed at 35% rate if we took it out of there. I was wondering if a home loan or line of credit would be a better way of getting that money. Do you have any advice for us?

Terry Says:  Gosh, I know how tempting it is to want to help your children at your own expense.  But if they can’t even scrape together $20,000 for a downpayment, how will they be able to afford the other expenses of homeownership, and the unexpected things that come along.  I’m all for home ownership — but you don’t want to enable them, or set them up for disaster.

My suggestion would be to say that when they save $20,000 you will “match it” with an additional $20,000.  By then you’ll have two answers — first, where to take the money from, and second, whether they have the discipline to get that far!!

I know this is not the answer you wanted, but I think it’s the right one!