Is the burden of a down payment stopping you from buying your first home? If saving up enough cash for it is a challenge, perhaps you should consider asking for help.
Your relatives might be willing to give you a gift that could serve as your down payment. If so, you should get acquainted with the regulations that might apply when using gift money as a down payment for a mortgage in West Jordan. City Creek Mortgage tells us more.
The source of the gift matters
Your lender might not allow gifts from friends, colleagues or neighbors. Gifts from grandparents, parents or siblings are often acceptable, though. Still, it’s best to talk to your loan officer about acceptable sources of gifts.
You need a formal gift letter
Typically, lenders request gift letters from people giving others money to buy property. Your lender might ask you to present a signed statement clarifying that the cash is a gift and not a secret loan.
The letter should contain your and the benefactor’s name, phone number, address and signature. It should also clarify the amount gifted and how you’re related to the person giving you the money for your down payment.
Documenting the gift is important
Borrowers need to provide mortgage lenders with a paper trail of the gift transaction. You will need to present bank statements, wire transfer receipts and any other documentation your loan officer might deem necessary.
Gift money could have tax implications
There might be tax implications for both givers and receivers of gifts. Speak to a tax professional before you accept a cash gift for the down payment.
Saving up cash for a down payment is often the hardest challenge for most first time home buyers. One way to get around this problem is to use a cash gift to fund your down payment.
However, when it comes to using gift money as a down payment, applicable regulations vary. Talk to your lender about your particular program’s guidelines.