Did you recently receive a monetary gift and want to use it toward a down payment? That extra cash might be helpful when exploring options in making that initial up-front parital payment. Gift money could be the extra boost you need to achieve homeownership.
Gift money can come from relatives, defined as the borrower’s spouse, child, or other dependent; another individual related to the borrower by blood, marriage, adoption, or legal guardianship; or a fiancé fiancée, or domestic partner.
Gifts can also be accepted from non-relatives, including close family friends. Ensure the money is coming from someone you trust and will not create any conflict in the future.
Today’s prospective home buyers generally struggle to save funds due to rising rental costs, student loan debt, and other financial burdens – not to mention the steady rise in housing. Therefore, the quickest path to homeownership is to utilize gift money.
To avoid mortgage insurance on a conventional loan, a 20 percent down payment is required. To overcome this challenge, gift funds or other loan options can offer a more flexible down payment. Sellers, realtors, or brokers are ineligible to gift funds to potential borrowers.
Before accepting the monetary gift, ensure the borrower and gift-giver both fill out a formal document detailing the following information:
- Borrower’s name
- Donor’s name
- Donor’s contact information
- Donor’s relationship to the borrower
- Gift amount
- Address of property being purchased
All parties must sign the letter, and it should state that no repayment is expected or required. Financial records should clearly document the transaction as well.
Are you looking to get approved for a home loan? Contact the experts at EB Mortgage today.
EB Mortgage is a locally-owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us at 866-246-0516 or e-mail firstname.lastname@example.org today.
Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.