Nov 10, 2015 03:01 AM EST
The millennial generation, those in the 18 - 34 age range, have been slow to enter the home buying market. Sidelined by student loan debts, high unemployment, and tighter mortgage credit, millennials have a different outlook on home ownership as other generations have in the past.
The homeownership rate of millennials has been decreasing from year to year, according to Marketwatch.
Although the homeownership rate for millennials rose from 34.8% to 35.8% this quarter, it still showed a decline compared to the same quarter in 2014 with 36% of rate. Other comparisons in 2004 the rate reached 43%.
The millennials might find it tough to build the much extra savings so they can have enough cash for the home ownership down payment.
Brian Broderick, partner at Hemenway&Barnes LLP, a Boston legal and fiduciary firm, advised an old approach solution for the problem: intra-family loans, as reported on Forbes.
Broderick said that the millennials may consider the "Bank of Mom and Dad" option only if they are willing to "do it by the book". It includes a professional draft of the loan, whether it is short-term, mid-term, or long-term. It also includes the arrangement of rates.
According to Investment News, Charles V. Douglas, editor of the National Association of Estate Planners and Councils' Journal of Estate and Tax Planning, said that the parents as the lenders may need an attorney to draft the note and an accountant to make sure they know what is going on.
Intra-family loans can be made below market interest rates. As of July 2015, short term rates for annual lending were 0.48%, mid-term rates were 1.77%, and long-term rates were 2.74%. It may also be the only solution for those who have poor credit history causing by high student debt or low access to credit.
The loans can also be the choice of a second mortgage for the home down payment when the banks are not allowing any institutional outside borrowing. It has the lower closing costs and will keep the interest flow in the family.
But it is advised to not mistake the intra-family loan as a wealth giveaway to the younger generation.
The lenders need to have a promissory note, create a fixed repayment schedule, secure the debt and demand repayment. The family should also keep records that reflect that this is a true loan, the borrowers need to make timely repayments and must remain solvent.
The millennials who involved with intra-family loans should be active and transparent. They should have the initial conversations with the parents before they start missing payments.
As with other family decisions, the intra-family loan should be applied with caution.
Journalists love their jobs because they get to interact with people from all sorts of backgrounds and expertises, then turn around and share their knowledge with the world.
As the metaverse takes over more of our digital lives, the commoditization of all aspects of our virtual beings becomes more and more of a reality.
Rustam Gilfanov is a famous IT businessman, a founder of a large IT company, and a partner of the LongeVC Fund.
Bitcoin and cryptocurrency in general guarantee some amazing profits if invested correctly.
In the currency trading business, many individuals make mistakes. Since most individuals join this profession with too much excitement, they forget about efficient strategies. Instead of controlling their investment and execution process, most individuals make poor choices for trading.
In today's digital world, more and more people are investing in cryptocurrencies. These digital tokens have exploded into popularity over the past few years, and have grown to the point that there are now nearly over 6,000 of them, according to Statista.
Following the pandemic, natural calamities, and major employment shifts, a startling new study on the online news site News Nation shows that 1 in 4 Americans don't have an emergency fund.
Generational wealth is a facet of wealth management that is often misunderstood. Labeled trust fund babies, rich kids, and lucky breaks, those who receive an inheritance from families are rare.
Social media has successfully made it to the mainstream consciousness of over half the global population. DataReportal's latest study shows that over 4.33 billion people worldwide are using some form of social networking site this year. That's why it's no wonder many tech companies are interested in investing or forming the next Facebook, Twitter, or YouTube to capture the hearts and minds of the general population.
Ease of access, freedom to choose in which to invest the money and lines of credit designed according to the needs of consumers, are some of the characteristics that have made consumer credit one of the most important financing products in the world’s market.