Tuesday, December 4, 2012 - Article by: Joe LaVallie - HomeStreet Bank -
The number of down payment gifts is increasing. There is a right and wrong way to give a gift for a down payment. In a recent study found that default rates on low down payment loans where gift funds were used were higher than those loans that didn't have gift funds. You can't just magically have your parents money pop into your checking account. If you have questions about gift fund please feel free to contact me.
You will need to complete a gift letter. This form should be available from your lender. The letter will cover the following:
Amount of gift, property address, relationship of the parties, and verification that the funds are a gift and not a loan.
THE PAPER TRAIL:
Please keep it simple. Provide a copy of the account that the funds are coming from, provide a copy of the check, and provide a copy of the deposit slip. The simpler the documentation the easier the gift is going to through underwriting. If you are using multiple accounts for the gift funds; gather all the documentation and make is simple to follow the money.
There may be tax consideration on the gift. Please consult your tax advisor for your specific situation.
To make the gift process simple and successful; follow your lenders instructions to the letter. Gift funds are acceptable and popular, but make sure you have the proper documentation so you don't get stuck in underwriting and have to do the gift paperwork twice.
The Integrity Team
1-800-761-7788 ext 7604
To Apply Online http://www.homestreet.com/jlavallie
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