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Especially when buying a first home, some borrowers need
help coming up with the down payment. Family members
are often a good source of assistance. Mom, pop, grandparents,
brothers, sister, aunts and uncles -- all are acceptable. Gifts
from non-family members are generally not acceptable unless
you can document a close past relationship. In other
words, your friend or coworker is not generally acceptable.
If you do get help from family member, lenders require this
to come in the form of a "gift." If you're
really borrowing the money from your family member, intending
to pay it back later -- your lender doesn't want to know
about it. With rare exceptions, you are not allowed
to borrow money to come up with your down payment.
Your lender will supply you with a form called a "gift
letter." The gift letter states the relationship between
the parties, the address of the purchased property, the amount
of the gift, and sometimes the source of the funds used to
make the gift. The gift letter also clearly states that the
funds are a gift and not required to be repaid. You
and the person providing the gift will have to sign the letter.
With most lenders, the donor will have to also provide evidence
that they have the ability to make the gift. This can be
in the form of a bank or stock statement to show they have
the funds available. You should also make a copy of the check
used to make the gift and keep a copy of the deposit receipt
when you deposit the gift funds into your bank account or
escrow.
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Payment from a 401K or Retirement Account
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copyright 2000 by Terry Light and
RealEstate ABC
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