Most loan guidelines will not allow an third party, even a family member, to loan you the money for the loan down payment. In some instances a gift is allowed from a family member though. To set it up properly you'll need to go about it a certain way depending on your situation.
If you have the money for the down payment and closing costs but are still getting a gift from family it's easiest to not even bring up the amount of the gift at all. Many times though buyers don't have enough for the down payment and closing costs so will need the gift to use for closing. In this case as long as the buyer has the required down payment in their own funds then the family member will write a gift letter and it is allowed. The gift letter states who is giving the money, who is receiving the money and that it is truly a gift and doesn't need to be repaid.
The last case would be where a buyer does not have enough for the required down payment. Here the buyer needs to receive the gift well ahead of closing and put it into their bank account. When the lender verifies the buyer's assets they will look back 60 days. If the gift has been in there the whole time, it's considered 'seasoned' and is viewed as the buyers own money.
Every loan situation is different so I'd suggest talking with your lender before making any final decisions.
Tuesday, July 29, 2008
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