How Do Gift Funds Work?
Trying to buy a house but don't have enough money for a downpayment? A little financial help from a family member or a friend can go a long way. Gift funds can help you get into a home as long as a few guidelines are properly followed.
Trying to buy a house but don’t have enough money for a down payment. Gift funds can help save the day, but it’s important that you follow the proper steps for the gift to be accepted by your lender. Fortunately, New American Funding can help guide you through the process of using gift funds for your down payment.
For starters, it's important who the gift funds come from. In most cases, gift funds must come from a family member. If the donor is not a relative, you’ll need to fill out additional documentation about the lengths and nature of your relationship, the type of loan you're applying for and your lender’s approval will also be big factors. If your donor isn't a relative to disclose who the gift funds came from, you'll need a sign statement from the donor that indicates the money as a gift and doesn't need to be repaid.
New American Funding can help with a template gift letter for you and the donor to fill out. The letter provides the donor's name, address, contact info, bank name, account number, as well as the recipient's name and relationship to the donor, plus the amount and date of the gift. It’s important that the funds are properly tracked, so be sure to keep copies of everything from your gift check to the receipt of the deposited funds.
Depending on your loan program, evidence of your donors ability to provide gift funds, and evidence of withdrawals of the gift funds from your donors account maybe required to avoid complications with your loan. Keep your bank account activity as simple as possible. Whichever bank account you'll be using for all your money at closing should only have one deposit your gift down payment check. That way, it's your deposit receipt and gift letter numbers will match exactly, and your lender won't need even more paperwork. We can help you make your home down payment the best gift you've ever received. Ready to get started? Contact new American funding today.