If you have millennial-age children, you’re wallets likely will be thinner once they decide to buy their first home.
A new study by mortgage lender loanDepot found that the number of parents who expect to help their millennial children purchase a home has risen 31% over the past five years to 17% from 13%. Half of these parents expect to pitch in on down payments, while a fifth expect to cover closing costs and another fifth plan to cosign the loan, according to the data. Also growing is the number of parents who are willing to pay for other expenses, such as student loans, to help their children finance homeownership.
Of course, just because parents are agreeing to help their kids out doesn’t mean they’re dipping into their savings to do so. While 67% expect to use savings, a small but growing share of parents will resort to other methods including cash from a refinance or taking out a personal loan.
As for the millennials themselves, more are turning to less traditional methods to gather the funds for a new home. Rather than get a second job or asking for money instead of gifts, a 39% plurality said they would spend less on eating out or entertainment, the loanDepot study found.
Whatever the way they get the funds, loanDepot president and chief operating officer Dave Norris stressed the importance of millennials to the housing market.
“Support from parents is playing a significant role in the housing recovery,” Norris said in the release. “Without that financial support, it’s likely the pool of millennial first-time home buyers would be even smaller than today.”