Today I’d like to discuss with you some general information on how you can buy a home with gift fund assistance.
Some consumers who to come to us for help are short of funds to close on their homes. Some of them are lucky enough to have a family member who offers help by gifting them money.
Gift funds are a great way to bridge that gap. The alternative is a pretty expensive down payment assistance program which has some restrictive qualification standards.
There are some stipulations about gifting money for real estate transactions, however. The gifter has to be an immediate family member—a grandparent, parent, sibling, and so on—and the donor will have to sign a gift letter. This letter is very important because it states that this is a bona fide gift rather than a suspicious type of loan that gets paid back after closing.
The lender will also have to document the transfer of funds from the donor’s account to the borrower’s account. Now, this transfer typically happens just after the appraisal comes in, but before closing. This timing is more common because most donors, frankly, don’t like the idea of giving a large amount of money to someone whose deal is not yet guaranteed to go through. By that point in the transaction, the unknowns should have been addressed. Remember that some of the terms and conditions for gift funds may vary be lender – I’ll be happy to answer any questions you might have.
If you have any questions about this or want to speak about planning ahead for a purchase in the near future, please feel free to reach out to me and my team. We would be honored to help you.