How to Use Gift Funds For Your Home Purchase All You Need To Know About
Hey guys, Today we’re back and we’re back to talk about gifts and gifts when it comes to buying a home, they can help you expand your purchasing power, and they can help you qualify. And they’re really awesome way to just get into a house sooner than having to save a large down payment. If you are somebody who is fortunate enough to know someone who can help you out with some great down payment funds. This is a topic for you. Definitely don’t forget to comment, and subscribe To My Email List. So let me know if you have any questions below regarding gifts at all and how they can help you purchase. I am happy to answer any and all questions, And today we’re talking about gifts. Now gifts are kind of a strange topic in mortgages because typically people think that they have to save their down payment. But you can receive a gift from a family member or a family-like Relationship for your home loan.
• And it can be for all of the downpayment,
• It can be for closing costs,
• It can be for closing costs and downpayment.
• It could be for a partial downpayment, but you can definitely get a gift.
Now, how we document the gift, though, is very important. Now I have a very specific email instruction list and an attached gift letter that I will send you if this pertains to your particular scenario. But a couple of key things that I really think are important for you to know.
1. So one, your relationship with your donor. So this has to be a family member or a family-like relationship. And when we say family, like it has to be documentable, and not through Facebook, right, I have to be able to show that you guys live together in the past or that you had, you know, a long-standing relationship. And as I’m having trouble figuring out examples in my head, you can see where I’m going this is very, very challenging. So in my mind, the easiest way is to get a gift from family. Now a gift from family would then come from
• either a transfer from their account into your account, it would come in form of a cashier’s check again, from a withdrawal from their account into your account,
• or it would be a wire transfer or cashier’s deposit directly to the title.
Now I said one 1 key thing three different times. And that was it had to be a withdrawal from their bank account into the next source. It is super key that we document that those funds came from your donor’s account if we cannot document that they came from the donor’s account. Unfortunately, underwriting will not let us use this. Now, in order to prove that occasionally we need a copy of their bank statement. Or we need a copy of their transaction history or a letter from their bank saying that they had X, you know, balance in their account and that they verify the transfer or the deposit or the cashier’s withdrawal on X date. Okay, this is super important. You should talk about this to your donor when discussing your gift, because occasionally they feel that this is an invasion of their privacy. And we always want to respect all of our donor’s generosity, but I don’t want you to end up having to go back and forth with them and create tension where there doesn’t need to be.
Now the next thing is a gift letter. Now a lot of you guys think that you’re just going to write a letter that says to whom it may concern, I’m giving Sally X dollars for her home buying process. But this is actually a standardized form that we’ll send to you to get signed. Now it’s going to have the
• Name of your donor,
• Their relationship with you
• The amount that they’re giving you the bank account that it comes from, and
the institution and account number, right, and then they’re going to sign it saying that you do not have to repay any of these funds, and then you will sign it as well. The key to a gifted guy is that there is no repayment required, you are not allowed to borrow your down payment. So it cannot be alone, even a personal one through the family.
How the Gift Letter Work
Now the third thing here that I want to discuss gifts, is that a gift amount has to be transferred and given in the exact amount that you get approved for. Okay, so if that gift letter says that they’re giving you $2,000 But in the end, you only need 1500 They still have to give you $2,000 Because that’s the way your home loan has been approved. Some of the ways that I avoid confusion is I have the donors just give them money as soon as possible in the home buying process. Right so that there is no confusion, but occasionally this will cause some issues. If a gift isn’t given until the very end So I just want to be very clear, however much they said that they’re going to give you they have to give you now whether or not you give some of that back is your own choice, but for documentation purposes, they give you exactly the amount that they stay in that letter. So I hope that this content was very helpful and explained a couple of things about gifts that maybe you didn’t know. And if you found this valuable, I hope that you’ll share those with friends and families also thinking about buying and if you need I look forward to hearing from you