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Follow These 6 Steps When Using Gift Funds

Reblogger Rekha Vyas
Real Estate Agent with Keller Williams Realty of Brevard

This is a great post that explains the required documentation of gift funds in a home loan. I thought I would share this useful post with all 

Original content by Sean Young NMLS: 191647

Follow These 6 Steps When Using Gift Funds

 

Follow These Steps When Using Gift Funds

 Gifts are allowed in most cases but the problem is, if you don’t accept the gift in a  “lender-friendly” way, the mortgage underwriter could reject it, and not allow it.

  Six Steps To Success With Your Down Payment Gift Funds

 You can’t just deposit a cash gift into your bank account. You have to follow a  series of steps and keep records.

  1.  Provide an acceptable gift letter signed by all parties. Provided by the lender.

  2.  Provide a bank statement from the gifter’s account to show proof of funds.

  3.  Provide documentation of the gifter’s withdrawal of funds via teller receipts in   the exact amount of the gift, stamped and signed by the teller.

  • If the gifter is sending a wire, provide a copy of the wire transaction.
  • If the gifter is providing a check or money order provide a copy of it and then     provide an updated statement after the check has cleared the account.

 

4.  Provide documentation of the giftee’s deposit of funds via teller receipts in the exact amount of the gift, stamped and signed by the teller.

5.  Provide a new statement showing the deposit and updated balance. Make sure the statement goes back from the date of your last statement you might have previously provided to cover any gap.

6.  Make sure all statements show name, at least the last four of the account number, bank name and balance.

  • Any time you get a statement from a bank teller make sure they always give you a teller stamp signed and dated.
  • Any time you print statements online make sure it includes the URL to show proof that it was from online.

Lenders require these 6 steps for two basic reasons.  First, they want to make sure that the cash gift is “clean” (i.e. not laundered).  Second, they want to make sure the gift is really a gift and not a loan-in-disguise. It’s why lenders typically require that the loan application be accompanied by a signed, dated letter. This will be provided by your lender for you to fill out.

For 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]

Keep The Cash Gift Funds Separate From Your Other Money

As an additional step, home buyers receiving cash gifts should make sure that gifted funds are not commingled at the time of deposit.

If the cash gift is for $10,000, therefore, the bank’s deposit slip should indicate that a $10,000 deposit was made — nothing more, nothing less. Don’t add a random $100 deposit to the transaction, in other words. The $100 deposit should be a separate transaction.

It’s also worth noting that gifting funds between family members can create both legal and tax liabilities.

If you’re unsure about how donating or receiving a gift may impact you, call or email me directly. If I can’t help you with your questions, I can refer you to somebody that can.

Sean Young

www.mylendersean.com

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Sean Young
Mortgage Loan Officer

Cell: 303.521.7169

www.flyerfriday.com

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NMLS: 191647  / LMB: 100013240

Home Loan by Sean Young

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About the Author...This article was provided by, Rekha Vyas a Nationally recognized Realtor, Certified Residential Specialist and Graduate of the Realtor Institute. Rekha can be reached via e-mail at RekhaVyas1@gmail.com by cell phone or text message at 321-759-4409. Rekha has helped many people buy and sell their home.  For real estate and homes on the Space Coast of Florida see www.RekhaVyasRealtor.com. If you need to Short Sale your Brevard county home please contact me for more information.

 

           

Show All Comments Sort:
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

There are many challenges when it comes to gift money. so the list that was put together is a great start to doing it the correct way.

Make it a great weekend!

Sep 07, 2013 02:42 AM
Rekha Vyas
Keller Williams Realty of Brevard - Melbourne, FL

Joe, hope you have a wonderful weekend as well,

Sep 07, 2013 11:23 PM