There are companies now that will front you money based on the equity in your house. This is similar to a reverse mortgage except there are no age limits. Instead there is a contract period after which the contract has to be settled as opposed to it being settled after your death. You can choose this time period so that it would probably be after your death so that it would effectively end up being like a reverse mortgage You can then use this money for a down payment on a house for your son and/or daughter. It’s called a home equity investment or HEI. There are no monthly payments as there are for a Home Equity Line of Credit or HELOC. Instead, the company takes an equity position in your house so that, when the contract is up, either the house would be sold at the current assessed value or the company would be paid back according to the agreed upon percentage of their equity investment. Hopefully, that house would have increased in value over the time of the contract period as most real estate has over the nation’s history.
I actually did this and combined the equity of the house I live in with a rental property to generate an amount of money that almost paid for the condo I bought for my daughter. She has a small mortgage which basically her roommate pays. Since the contract is for 30 years, I will be 111 before it’s up so effectively it is a reverse mortgage. Since my daughter will inherit the two properties this contract is based on, she will inherit less money than she would have because of the payback to the HEI company. However, she has a condo now instead of waiting till I die to buy something so that, instead of paying rent till then, she owns an asset which is also increasing in value. The longer I live, the more this makes sense. Otherwise, she might have to remain a renter until she’s almost retired in order to be a home owner. More and more people, and I hope I am one of them, are living to older and older ages these days so it is not exceptional if their children reach retirement age before they inherit property from their parents and can afford a home.
Since there is so much equity just sitting in houses around the country, and it is so difficult for young people today to become home owners based on their own earning ability until later and later in life, it makes sense for parents to transfer some of this equity to their offspring so that they can become home owners and start accumulating wealth earlier in life rather than being renters most of their life and becoming poorer as rents increase over time.
This idea could also be used by governments to give a start to wealth accumulation for those unfortunate enough not to have parents with equity in a house or the stock market. Equity could be borrowed from those who are more fortunate and loans created based on this equity in a program overseen by governments. Those from whom the equity was borrowed would have to be incentivized in some way either by payments of some kind or tax reductions or by taking an equity position in another person’s house. In this way loans could be collateralized so that people with no family history of wealth accumulation could start accumulating wealth.
Just as the returning GIs form WWII were given access to home ownership (except for black people who were redlined), governments could facilitate the reduction of wealth inequality which has reached absurd proportions. As of the first quarter of 2025, the top 1% of American households own about 30.5% of the nation’s wealth, while the bottom 50% own only 2.5%. More broadly, the top 10% of the population holds roughly 69% of the total wealth, and the bottom 50% owns just 2.5%. This is a staggering inequality of wealth. Governments, whether at the local, regional or national level need to do more to facilitate a more equitable distribution of wealth, and this is a way they could do so.
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