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Gift Funds

What You Need to Know About Gift Money

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If you’re getting gift money to help finance your new home, here are a few things to remember:

The “Donor” of the gift must be a family member, fiancé or domestic partner. They must prove they have the ability to provide you with the gift by providing a copy of their bank statement, a copy of the canceled gift check and/or a signed letter from their bank saying the funds are available.

The “Gift Letter” is a form we will provide. The donor will need to complete it with basic information and a signed statement that the funds are a gift with no expectation of repayment.

The “Transfer” must be documented carefully. Make a copy of the gift check and deposit slip or of confirmation of the wire transfer. Deposit the gift in the account you’re already using for verification of funds to close. DO NOT combine this deposit with any other incidental deposits. Provide either an online update or the next account statement to show that the deposit cleared into the account.

Some programs allow for the entire down payment to be in the form of a gift. Others may require that you have at least 5% of the purchase price from your own funds. As these rules can vary or change at any time, never hesitate to consult with us for the specifics as they relate to your transaction.

While the documentation requirements may seem excessive at times, please remember that the underwriters are simply following the rules to assure that your down payment is not borrowed and that any allowable gift funds are coming from acceptable sources.

And remember, if you have any questions about the mortgage process, just ask me! For the rest of the blogs in this Loan Process series, click here.

Can I Use Mattress Money to Close My Loan?

This is the first post in a nine part series on the mortgage loan process. With vigilant focus on the source of funds for closing mortgage loans, it’s important to know what’s acceptable.

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Here’s what you need to know and what you’ll need to provide:

Mattress Money or any “cash on hand” is not acceptable. All funds must be “seasoned,” which means your money needs to be in an institutional account (bank, credit union, brokerage, etc.). You will need to provide all pages of up to three months of consecutive statements for proof these funds are yours.

Gift Funds are usually OK with a signed “gift letter” (a form we provide) and evidence of the donor’s ability (a statement showing sufficient funds). Later, we’ll need copies of the check, deposit slip and account statement to show the transfer into your account.

Assets Being Sold, such as a car, boat, collectible or anything of value you are selling, require proof of ownership (such as a registration or title) and evidence of value (blue book value or appraisal). After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds to your account.

Other Examples include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings. Be prepared to show the source of funds, evidence of transfer into your account and any supporting documentation of value, terms, service provided, etc.

TIP: If you have time and want to minimize paperwork, consolidate all funds into one account at least two or three months prior to closing. Save any and all evidence of transfers and deposits and keep activity to a minimum.

Never hesitate to ask questions when you’re unsure about what will work and what will not. All contact information for my team is found here.