Posted on: 28th Sep, 2011 01:11 am
My friend is about to close on a new house, but the old one has yet to go under contract. I will be giving them the funds required for the down payment, which they will repay from the equity that they have in the old house. The mortgage broker is asking me to sign a "gift letter" which will mention the fact that the down payment is a gift. Well, it is not. Should I sign the gift letter to make the lender happy, even though I'll be repaid when the house sells?
Hi Carren,
The lender will be asking for a gift letter. Unless you provide with the gift letter, it won't be considered as a gift but a kind of lien/mortgage on the property. The lender won't agree to give a loan if your friend takes out a new loan to provide with the down payment. So, you will have to provide your friend's lender with a gift letter. But again, if you provide the gift letter to the lender, you will be actually deceiving him as you will be repaid by your friend. It will be better if you and your friend have a word with the lender regarding this matter.
Thanks,
Jerry
The lender will be asking for a gift letter. Unless you provide with the gift letter, it won't be considered as a gift but a kind of lien/mortgage on the property. The lender won't agree to give a loan if your friend takes out a new loan to provide with the down payment. So, you will have to provide your friend's lender with a gift letter. But again, if you provide the gift letter to the lender, you will be actually deceiving him as you will be repaid by your friend. It will be better if you and your friend have a word with the lender regarding this matter.
Thanks,
Jerry
>>Should I sign the gift letter to make the lender happy
No - that'd be mortgage fraud. And the Loan Officer shouldn't have suggested it if she knew it really wasn't a gift ... the Loan Officer could be prosecuted for that.
No - that'd be mortgage fraud. And the Loan Officer shouldn't have suggested it if she knew it really wasn't a gift ... the Loan Officer could be prosecuted for that.
Maybe you can put a lien on the property, so it can make sure you will get paid at closing; at the meanwhile, it is no longer a gift...
Lender maybe ask for a LOE, just prepare a straight note, no payment to C.O.E.
Lender maybe ask for a LOE, just prepare a straight note, no payment to C.O.E.