When you are getting a mortgage, the underwriter will want to verify all the cash used for closing. If you are going to be short, you may want to see if someone in your family can give you a gift. Most loan programs will allow for gifts and if your family is willing, it's a great way to help with your cash for closing.
Due to all the foreclosures and other issues that mortgage companies have seen with gifts, there is more documentation required now than ever before. FHA and VA are more specific than conventional, but as long as everyone works together, it can be easy.
All files require a gift letter signed by you and the person giving you the gift. Most programs require the person giving you a gift to be a family member.
FHA and VA require that you also get proof that the donor has the ability to give you the gift. So we need to get a gift letter along with a bank statement showing that the money is available. If there are large deposits on the donor's bank statement, they will have to be explained. We also need to see that the money came from that account. The easiest way is to have the donor give you a cashier's check with the account number written on it and the proof of withdrawal from that account.
Conventional loans are a little easier. You still need the gift letter, but usually you are not required to show proof that the donor had the ability to give you the money. You will need a cashiers check that you can bring to closing for the amount of the gift.
In both cases if you deposit the gift money into your account, we will need to show that the check was deposited and the new balance.
If you aren't sure what you need to do, ask your loan officer for specifics. With all the changes over the past few years, gifts are still possible, it just takes an extra step or two!
Leslie Vanderwerf, NMLS ID#335509, Summit Mortgage - Email – Website
