What Is A Gift Letter?Jonathan
With housing prices rising in recent years, one quarter of home buyers 23-31 received financial help from friends or family for their down payment and 17 percent of those aged 32-41 also received help according to the National association of realtors.
Down payment gifts still need to be documented accurately in a gift letter.
If you’re in the process of buying a home and receiving financial help from a family member or friend, you maybe asked to provide a gift letter. This document is an essential part of the loan application process and helps ensure that the down payment funds you’re using come from legitimate sources.
A gift letter is a written statement from the person providing the gift (the giver) stating that they’ve given you money for the down payment on your home purchase. It also verifies that the giver had the financial means to provide the gift, which is especially important for FHA loans. The letter should include the giver’s name and where the gift came from, as well as evidence of their ability to gift the money and their relationship to you.
Additionally, the gift letter confirms that the funds won’t ever have to be paid back by you, the recipient. If repayment were required, the lender would have to take that into consideration when evaluating your loan eligibility.
To ensure that both parties are protected, the gift letter should explicitly state that there’s no expectation of repayment or service in exchange for the gift. It should also include a statement that the giver will not place a lien on or make any claims to the property, even though they contributed to the purchase of it. Of course check with us and we can provide specific details for your unique situation and needs to get started – fill out our quick purchase wizard on our website.