Posted on: 18th Aug, 2010 03:38 am
what is the downside of aq gift letter?
I don't know why there would be a "downside" to a gift letter. When you are seeking a mortgage, your lender needs to be able to verify the source(s) of your funds. It's an assessment of risk. If you're getting a gift from a family member, that needs to be detailed. The gift letter provides evidence that the funds you are being given will truly be a gift and not a loan disguised as a gift. If you're taking a loan to use for cash, that's an additional risk that a lender would need to consider.
In modern times, lenders will require that a gift donor provide documentation to verify that the funds existed in his or her account to begin with - in other words, they have to show that they had enough money to give you a gift to begin with.
I don't see a downside; gift monies are regularly used by buyers and have been for many years. Gifting enables many people who otherwise wouldn't have the funds to be able to purchase a home.
In modern times, lenders will require that a gift donor provide documentation to verify that the funds existed in his or her account to begin with - in other words, they have to show that they had enough money to give you a gift to begin with.
I don't see a downside; gift monies are regularly used by buyers and have been for many years. Gifting enables many people who otherwise wouldn't have the funds to be able to purchase a home.
ok here is a downside....
In many instances, the intent is to pay the person back even though the gift letter requested by the bank indicates there is NO repayment required. So, if the person gifting the money intended to get repaid, that gift letter could prevent that from happening.
In many instances, the intent is to pay the person back even though the gift letter requested by the bank indicates there is NO repayment required. So, if the person gifting the money intended to get repaid, that gift letter could prevent that from happening.
You're correct, Eric. However, I don't believe that anyone truly desirous of paying back a "gift" would run into any real problems. I'm sure we've had plenty of gifts paid back over time.
I certainly hope we won't get into the era of QC that will cause servicers to follow up in some fashion to ensure that borrowers haven't paid back their gifts. It smacks of Big Brother sometimes when we get such digging done. I surely don't disagree with the need for the stipulation in our gift letters - borrowers need to know the full requirements, and though we can't stop some from lying, we want to be certain they know the rules.
I guess I'm contradicting myself here...not sure there's a delightful solution for those who feel compelled to pay back, even though there is no need to do so.
I certainly hope we won't get into the era of QC that will cause servicers to follow up in some fashion to ensure that borrowers haven't paid back their gifts. It smacks of Big Brother sometimes when we get such digging done. I surely don't disagree with the need for the stipulation in our gift letters - borrowers need to know the full requirements, and though we can't stop some from lying, we want to be certain they know the rules.
I guess I'm contradicting myself here...not sure there's a delightful solution for those who feel compelled to pay back, even though there is no need to do so.