Posted on: 08th Apr, 2004 11:37 pm
Mortgage Gift letter is what the donor of the gift writes to the lender stating that he has offered a gift of money to the home buyer.
Homebuyers often require extra funds to make their down payment or pay part/whole of their closing costs when there is shortage of cash to pay for these upfront costs. They can borrow from a non-profit organization but lenders often do not prefer borrowed money as the down payment. In this situation, cash gift from family members is very helpful.
When a gift is made available to a homebuyer applying for a mortgage, he needs to write a mortgage gift letter signed by the donor and attach it with the loan application form. At times, the lender may also provide the buyer with a Gift Letter form which the latter only needs to fill out.
However, if the gift is made by any non-family member such as friend, employer, etc, then a borrower needs to provide documentation of a very close and long lasting relationship.
Homebuyers often require extra funds to make their down payment or pay part/whole of their closing costs when there is shortage of cash to pay for these upfront costs. They can borrow from a non-profit organization but lenders often do not prefer borrowed money as the down payment. In this situation, cash gift from family members is very helpful.
When a gift is made available to a homebuyer applying for a mortgage, he needs to write a mortgage gift letter signed by the donor and attach it with the loan application form. At times, the lender may also provide the buyer with a Gift Letter form which the latter only needs to fill out.
However, if the gift is made by any non-family member such as friend, employer, etc, then a borrower needs to provide documentation of a very close and long lasting relationship.
How to write Mortgage Gift letter
A mortgage gift letter includes the following:
Apart from the above, the gift letter should also state that the buyer need not repay the gift amount. Also, the lender should be assured that the gift funds were not made available to the donor from any person involved with the sale of the property including the seller, broker, real estate agent, loan officer or builder etc.
With gift of money, a buyer can afford to purchase a bigger house. At the same time, he can borrow less and thus reduce his monthly payments. However, the homebuyer needs to provide a written statement and prove that the money he's putting down is a gift. Here's where a mortgage gift letter serves its purpose.
- Name of donor of the gift
- Name of the recipient
- Relationship between the donor and recipient
- Cash amount gifted
- Address of the property for which gift is made
- Source of the funds (bank account, brokerage account etc) as offered by the donor.
Apart from the above, the gift letter should also state that the buyer need not repay the gift amount. Also, the lender should be assured that the gift funds were not made available to the donor from any person involved with the sale of the property including the seller, broker, real estate agent, loan officer or builder etc.
With gift of money, a buyer can afford to purchase a bigger house. At the same time, he can borrow less and thus reduce his monthly payments. However, the homebuyer needs to provide a written statement and prove that the money he's putting down is a gift. Here's where a mortgage gift letter serves its purpose.
Hi Victor!
Welcome to forums!
You are writing gift letters for two different people. This won't create any problem and I don't think the escrow company has to say anything in this matter.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
You are writing gift letters for two different people. This won't create any problem and I don't think the escrow company has to say anything in this matter.
Feel free to ask if you've further queries.
Sussane
can a gift letter be from a non-family member. My son's father, needs a gift of 2,000. My mom gifted him the money. My son's father and I were never married, but have maintained a close relationship (17 years). He and my mother are very close and she considers him part of the family. Please give me your expert advice...Thanks so much
Hi tara,
Normally gift letters from non-family members are not taken into consideration by the lenders. However, funds from a non-family third party can be considered by the lender if the person can provide documentation of a very close and long lasting relationship. This is done primarily to prevent people from taking out personal loans which may increase the persons debt to income ratio.
Thanks
Normally gift letters from non-family members are not taken into consideration by the lenders. However, funds from a non-family third party can be considered by the lender if the person can provide documentation of a very close and long lasting relationship. This is done primarily to prevent people from taking out personal loans which may increase the persons debt to income ratio.
Thanks
If i gift money for a mortgage without being on it can i then make a deed of trust to protect my gift
I have a family member to help me
with a down payment of $70000
but they dont want to right a gift letter,
Thier account said not to
with a down payment of $70000
but they dont want to right a gift letter,
Thier account said not to
Hi Guest,
If it's a gifted money, then I don't think you will be able to make a deed of trust to protect the gift. Nevertheless, to be on the safer side, it will be better if you could contact a real estate attorney and take his opinion in this matter.
Welcome bacmeth,
Unless you receive a gift letter and show the same to the lender, the lender won't accept that money as your down payment. It may be considered as another loan on your property. In such a situation, the lender may not consider giving you a loan.
If it's a gifted money, then I don't think you will be able to make a deed of trust to protect the gift. Nevertheless, to be on the safer side, it will be better if you could contact a real estate attorney and take his opinion in this matter.
Welcome bacmeth,
Unless you receive a gift letter and show the same to the lender, the lender won't accept that money as your down payment. It may be considered as another loan on your property. In such a situation, the lender may not consider giving you a loan.
It was me above!! Just forgot to login. :)
can a first cousin be a gift donor for a fda or usda loan with no money down or is it just imediate family??
Hi Guest,
It is better if someone from your immediate family can gift you the required sum of money. If there is no one as such, then you can take the lender's permission and check out if your first cousin will be able to gift the money to you.
Thanks,
Jerry
It is better if someone from your immediate family can gift you the required sum of money. If there is no one as such, then you can take the lender's permission and check out if your first cousin will be able to gift the money to you.
Thanks,
Jerry
My daughter is buying a house and I am here sales agent. I want to have all my commissioin used as closing costs and pre paids. If i do this and recieve no money do I have to pay taxed in Oregon.
Hi buddzzmzvx!
Welcome to forums!
This is something which a tax adviser will be able to answer better. You should immediately contact a local tax adviser and take his/her opinion in this regard.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
This is something which a tax adviser will be able to answer better. You should immediately contact a local tax adviser and take his/her opinion in this regard.
Feel free to ask if you've further queries.
Sussane
my sister give me some money for buying apt .how i show as a gift
My boyfriend and I are looking to purchase a house very soon and we've found one we like. His name will be on the mortgage loan. We share a bank account. I cashed out my 401k recently and we will be using the funds toward the downpayment. Do I have to do a gift letter? I am not a co-borrower on the mortgage but will be on the title deed if possible.
Hi tg!
Welcome to forums!
If your name is not on the mortgage docs and if you're paying towards the down payment, then it will be better if you could arrange for a gift letter. Nevertheless, you can even speak to the lender in this regard and take his opinion.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If your name is not on the mortgage docs and if you're paying towards the down payment, then it will be better if you could arrange for a gift letter. Nevertheless, you can even speak to the lender in this regard and take his opinion.
Feel free to ask if you've further queries.
Sussane
Hello, I recently came back from oversees. Before doing so, I wired some money from my savings account to my sister. Now she wired it back to me since when I arrived I opened my own account.
However, I want to buy a house and the UW keep asking my sister to fill out a gift letter. But this was my money! Why send a gift letter then?
However, I want to buy a house and the UW keep asking my sister to fill out a gift letter. But this was my money! Why send a gift letter then?