Down Payment Gifts Can Produce a 17%+ Annual Rate of Return
ONE OUT OF THREE FIRST-TIME HOMEBUYERS USE GIFT FUNDS FOR A DOWN PAYMENT.
According to the National Association of Realtors, 32% of homebuyers use gift funds for a down payment or to help with closing costs.
THE TYPICAL DOWN PAYMENT GIFT COULD GENERATE A 17% ANNUAL RATE OF RETURN.
Assume you gift a child or loved one $38,000 for a down payment on a $500,000 house and the house value increases by 3% per year for 10 years. (Note: average house price appreciation in America has been 3.99% over the past 20 years.) This will create nearly $200,000 of home equity wealth over ten years for your child or loved one, not even counting the principal reduction when they make their mortgage payments. Property value MINUS mortgage balance = home equity.
This means your $38,000 gift has produced a 17%+ annual rate of return. Where else can you earn that sort of return?
THAT is why gifting money to a child or loved one for a down payment on a house could be the best investment you ever make in their financial future!
THAT'S YOUR LIKELY ANNUAL RATE OF RETURN WHEN YOU GIFT SOMEONE FUNDS FOR A DOWN PAYMENT ON A HOME.
Source: Momentifi