the gift letter: was it a loan in disguise?

It can be very straightforward and simple, which makes it easy for you to create on your own. Your real estate agent or the sellers agent. If your parents are inclined to gift you money to enhance your financial future, a money gift letter is a smart thing to ask them to include with their generous monetary gift. When buying a home, consider working with a financial advisor to make sure your finances are prepared. For no-money-down mortgage programs, gift funds can be used for closing costs. Cash gifts are commonly used towards a down payment, but can also be used to pay for closing costs. The gift-giver can transfer the funds directly at closing as well, if all the documentation has been approved in advance. Many of these programs will help with the initial down payment if you fall into certain income brackets and others can do away with mortgage insurance, lowering the cost of your monthly payments. FHA loans are popular with some first-time homebuyers because they allow a minimum 580 credit score to qualify, which is lower than the 620 minimum conventional lenders require. Quotes displayed in real-time or delayed by at least 15 minutes. It is possible that the law may not apply to you and may have changed from the time a post was made. When underwriters look at your assets, they are essentially looking to confirm that the money in your account is truly yours. One workaround is for the giver to send the documents directly to the loan officer, who can protect the gift-giver's privacy, Thompson suggests. - WSJ About WSJ News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and. However, both you and the donor do need to have signed it for it to be valid. A gift letter should include the following information: Bear in mind that your mortgage lender may well look into the circumstances of the gift and may ask you for more information or evidence about it. Date: To: [ name and address of bank or lender] I/We [ name of gift-giver (s)] intend to make a GIFT of $ [ dollar amount of gift] to [ name (s) of recipient (s)] , my/our [ relationship, such as son or daughter ], to be applied toward the purchase of property located at: [ address of the house you're buying, if known] . This is not an offer to buy or sell any security or interest. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. Gift letters typically come into play when a borrower has received assistance in . That distinction, between a genuine gift and loan fraud, is precisely why mortgage lenders require a so-called gift letter to document that any gift you get is in fact genuine. Lenders will not accept partial documents or documents that have information blacked out, so that is not even an option. Your lender might deny you a mortgage. These documents prove your income and the, How To Use Gift Money For Your Down Payment. They may want to see the donors bank statements to ensure he or she actually had enough money to give you. Let's assume your parents gift you $300,ooo, with the intent that you will use the cash to pay off your mortgage. The look-back period to establish whether money is or is not yours is only two or three months, which means you can avoid both the gift letter and documentation altogether if you deposit the funds into your own account at least that long before you apply for a mortgage.