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.
I have provided 3 gift letters for the amount of 90k from inlaws, my aunt and my cousin (whom I am very close to). My mortgage broker is stating that the lender wont accept the signed gift letter now because its from my cousin, and the lender only wants immediate family. For some reason they accepted it from my aunt however. Any thoughts on what i could do?
That lender is too stubborn. That's not a very helpful hint from me, but it's just the truth. Perhaps you can somehow put together a letter or memo that describes the relationship you and your cousin have, so as to make a stronger case for the cousin giving you a gift.
My fiance's family has gifted us money for our mortgage so that we can get in on the tax credit. My first question .. I am the only one on the loan and my grandmother is cosigning.. will that be a problem? Also, they pulled everything out they could afford to help us and I want to be able to pay them back when we have it but I do not want to get in trouble for doing so! Can I pay them back later without being charged with Fraud? We recently purchased a van and had to put all of our savings into it because it was junk from the start. We will have the money within a month or two and I want to give it back .. I would just wait but then I would miss the opportunity for the tax credit! Any advice?
If your grandmother owns a property, then you won't be able to get a tax credit as a first time home buyer. If your grandmother has given you the money as a gift for the down payment, then if you return the money it can be considered as a fraud.
Regarding the statement below, does this still apply for May 2010. I have a close friend that wants to help me buy a home. Is there a limit to the amount gifted?
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.
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.
Hi Guest,
As far as I know, the statement that you've mentioned here stands applicable for May 2010. I don't think there is a limit to the gifting amount. However, if the person gifts an amount which is more than that lifetime gift tax exemptions, then the donor will have to pay taxes on that amount.
Thanks
As far as I know, the statement that you've mentioned here stands applicable for May 2010. I don't think there is a limit to the gifting amount. However, if the person gifts an amount which is more than that lifetime gift tax exemptions, then the donor will have to pay taxes on that amount.
Thanks
Hi. I am closing on my house in 10 days. A close family friend is giving me a "gift' of $2,000 towards closing costs. My immediate family can't afford to help & she is my only option. I told my mortgage broker & they said to have her say she's my relative instead of friend. If she signed the gift letter saying she's my Aunt, do lenders look into that? Do they verify relationships? This is stressing me out & I don't want her to get in trouble. Thanks
Hi WendyR,
It is always better to tell the truth to the lender. Your friend can pose as your aunt but if the lender comes to know about the truth later on, he may take actions against you.
Thanks
It is always better to tell the truth to the lender. Your friend can pose as your aunt but if the lender comes to know about the truth later on, he may take actions against you.
Thanks
Buyer needs approximately 6,000 in additional funds to close. Could he get a cash advance from the $8,000 home buyer gov. credit?
Hi delight,
You won't be able to get the tax credit unless you buy the property. As far as the down payment is concerned, you will have to pay it upfront. Thus, I don't think it will be possible for the buyer to use the tax credit as down payment.
Thanks,
Jerry
You won't be able to get the tax credit unless you buy the property. As far as the down payment is concerned, you will have to pay it upfront. Thus, I don't think it will be possible for the buyer to use the tax credit as down payment.
Thanks,
Jerry
my wifes parents gifted us the down payment for our house. they both signed the gift letter. they now are going though bitter divorce and my wifes father is threatening to take us to court for the money stating it was a loan. by him signing the gift letter intention does this help us out in court
Hi nickwis,
As both husband and wife had signed a gift letter and given you the gift, it may help you while they file the lawsuit. However, in my opinion, it would be better if you could contact an attorney and take his opinion in this matter.
Thanks
As both husband and wife had signed a gift letter and given you the gift, it may help you while they file the lawsuit. However, in my opinion, it would be better if you could contact an attorney and take his opinion in this matter.
Thanks
MY SISTER DEPOSITED $3000.00 CASH INTO MY CHECKING, AND MORTGAGE COMPANY DOES NOT LIKE TO SEE CASH AS DEPOSITS, WILL WITHDRAW MONEY AND DEPOSIT AS A CASHIERS CHECK INTO MY SAVINGS, AND LETTER FROM BANK STATING SUFFICIENT FUNDS FOR CASHIERS CHECK.WILL THAT BE ACCEPTABLE?
A cashier's check would be a better way to transfer the gift money. However, it will be completely the lender's discretion whether or not the lender would accept such a transaction.
Hey,
My boyfriend's lender is asking for a gift letter from me for funds that I have in my savings account. We had tried applying for a co-signer loan, but since I have no established credit history, he is only able to get a loan for himself. Is there anyway of ensuring that my portion of gift money is tied to my name? He promises to pay me back and I fully trust him, but I am more concerned about him getting introuble for fraud and jeoprdizing the mortgage on the home. What actions can the lender take if someone is caught repaying a gifted loan?...
Thanks!
My boyfriend's lender is asking for a gift letter from me for funds that I have in my savings account. We had tried applying for a co-signer loan, but since I have no established credit history, he is only able to get a loan for himself. Is there anyway of ensuring that my portion of gift money is tied to my name? He promises to pay me back and I fully trust him, but I am more concerned about him getting introuble for fraud and jeoprdizing the mortgage on the home. What actions can the lender take if someone is caught repaying a gifted loan?...
Thanks!