Gifts:
Especially when buying a first home, some borrowers
need help coming up with the down payment. Family
members are often a good source of assistance.
Mom, pop, grandparents, brothers, sister, aunts
and uncles -- all are acceptable. Gifts from non-family
members are generally not acceptable unless you
can document a close past relationship. In other
words, your friend or coworker is not generally
acceptable.
If you do get help from family member, lenders
require this to come in the form of a "gift."
If you're really borrowing the money from your
family member, intending to pay it back later
-- your lender doesn't want to know about it.
With rare exceptions, you are not allowed to borrow
money to come up with your down payment.
Your lender will supply you with a form called
a "gift letter." The gift letter states
the relationship between the parties, the address
of the purchased property, the amount of the gift,
and sometimes the source of the funds used to
make the gift. The gift letter also clearly states
that the funds are a gift and not required to
be repaid. You and the person providing the gift
will have to sign the letter.
With most lenders, the donor will have to also
provide evidence that they have the ability to
make the gift. This can be in the form of a bank
or stock statement to show they have the funds
available. You should also make a copy of the
check used to make the gift and keep a copy of
the deposit receipt when you deposit the gift
funds into your bank account or escrow.
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