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My family "gifted" me money to put down on my home. Now 3 years later, I want to pay them back using the equity in the home. What is the best option?

by m.cantrell695 from Logan, Utah. Mar 30th 2016 Reply


There is a lot that goes into answering this question. How much are you looking to get back to them how much Equity do you have in the house what type of Loan program is it? Give me a call at 801 856 0318

Mar 30th 2016
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Much more info needed, so I cannot speak specifically about your exact scenario, but in general, if a family gifted their relatives the funds necessary to purchase a home and then the borrowers are now wanting to do a cash out refinance to "pay them back" then effectively, that would be considered loan fraud.. When you apply for a cash out refi, the new lender will require a "LOE" or Letter of explanation, asking the borrowers, why you want to do a cash out refinance. If the response is that they are "Paying back the relatives" for down payment funds, the lender will most likely deny the loan. I've had issues with the required LOE for cash out refi's, and the answer that is most likely accepted usually states the borrower is taking cash out to "Bolster their cash reserves".. Obviously, I am not advocating you lie on a LOE or commit loan fraud,,, i'm just merely giving you examples of what an acceptable LOE would be vs. one that would most definitely be denied.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Mar 30th 2016
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Lorne Harvey (lorneharvey)
#80 ranked lender in Washington - 431 contributions

Gift funds are just that, and the gift letter was specific to state that no repayment is expected. It is not permissible to pay back a gift of funds used to purchase a home.I hope this helps. William explained it well.

Mar 30th 2016
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