How give and receive a gifted down payment for your home…

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Receiving a down payment gift for the purchase of your next home? You’re not alone. Many U.S. home buyers do it.
Mortgage lenders allow cash gifts for down payment on a huge array of loan programs including FHA loans, VA loans, USDA loans, and conventional loans.

However, if you’re getting a cash gift for down payment, you’ll want to make sure that you “receive” your cash gift properly.
There’s a specific way to receive money for a down payment. Should you receive your gift improperly, your loan could be denied.

Step 1: What the Giver of the Gift Needs To Do
With your mortgage down payment gift letter written, you’ll want to make sure you don’t violate the rules of “taking a gift”. In order to do that, make sure to keep an extra-strong paper trail for the money being gifted.

If you are the person who is gifting funds to the buyer, for example, and you sell your personal stock holding as part of the down payment gift process, you will want to make sure that you document the sale of your stock as well as the transfer of funds from your brokerage account into the account from which you’re making the gift. Do not make the transfer without a proper paper trail.

Next, you’ll want to write a check to the home buyer for the exact dollar amount specified in the gift letter you’ve written. Photocopy the check. Keep one copy for your records and give one copy to the buyer — the lender will want to see it as part of the process.
Note that writing a check is will require more steps and will require more effort than simply wiring funds to the buyer. Be okay with these extra steps. It’s simpler for a lender to document and track a personal check than it is to track a wire; and it’s good to make things simple for the bank.

Step 2: What the Receiver of the Gift Needs To Do
Now that the gifter has handed, in the form of a check, a down payment gift to the buyer, the following steps are required.
First, with the gift check in hand, the buyer should physically walk into your to make the deposit in-person. Do not deposit the check online using an iPhone or Android app; or at an ATM machine.

In addition, into whichever bank account you deposit your gift money, make sure it’s the same bank account from which all of your money at closing will be drawn. You do not want to bring money to closing from multiple savings accounts. This, too, can make things difficult on a bank and the goal is to keep things simple.

When you get to your branch, do the following:
1.Deposit the gift funds into a bank account
2.End your transaction
3.Collect a receipt for your deposit

Under no circumstances whatsoever should you “co-mingle” your gift deposit with other monies, nor with other gifts. The amount specified on your teller receipt should match exactly the dollar amount on the certified down payment gift letter. If the amount is off by even a penny, the lender will likely reject your letter and the funds that came with it.

Note that if you are receiving multiple cash gifts for down payment, you should follow this process for each gift independently. Again, do not co-mingle your gifts. Be guided by your gift letter.

Step 3: Complete the Gift Letter
When you accept a down payment gift, remember that there’s a right way and a wrong way to do it. For example, you cannot randomly deposit your cash gift into a bank account. Doing so will get your loan denied.
The Gift Letter can be obtained by your Mortgage Lender.

Call The Go To Guys for questions regarding any of the above information. We are here to help! 770.924.1111

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