The fact that lenders have strict mortgage guidelines for home buyers is no surprise. No more financing with zero down. Most conventional loans now need 10% to finance.
In light of these changes, more people are taking advantage of cash gifts from family. The rub is that you want to make sure you accept that gift in a way the mortgage underwriter will accept.
Here are a few steps I found to help guide you along the way.
1. All parties should sign an acceptable gift letter. Here is an example:
I am the (relationship to recipient) of (name of recipient) and this letter serves as evidence that I am gifting (name of recipient) (amount of gift) to be used for the purchase of the home at (complete address of property). This is a gift, not a loan and there is no expectation of repayment.
Signed,
(signature of gifter)
2. Keep documentation of the gifter’s bank withdrawal with bank receipts.
3. Keep documentation that the gift was deposited with bank receipts.
4. Make sure the deposit is made independently of other monies you may be depositing.
It is important to the lender so they can be sure the cash gift is not laundered and is truly a gift and not a loan in disguise.
Good Luck and enjoy the gift!!
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