October 2013

Using a Monetary Gift as a Down Payment

Gifts are a special case, and if you are expecting that some of your money will be from a gift, a little planning ahead of time will make your experience much easier. First of all, gifts aren’t allowed on every program. With some conventional programs, unless you are putting at least 20% down, 5% of the down payment needs to be from your own funds. All the rest can come from a gift. With FHA loans all your cash can come from gift. Gifts also have to be documented in a particular way. We have to be able to show that this truly is a gift, not a loan. To show this, we use what is called a gift letter. This is a form (we will provide it to you) that is filled out by you and the person giving the gift. It states how much the gift will be,…

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Qualifying for a Mortgage: A Look At Assets

Assets Qualifying:  This is the third major area we look at, and here we mostly want to make sure you have enough money for your down payment and closing costs, and in some cases, money in reserve. Again, we get back to the idea of risk. The lender as a rule wants you to have your own money invested in the property you’re buying. The thought behind this is that if you have your own money at stake, you’re more likely to take care of the property and make sure you make your payments on time. It used to be that in order to get a mortgage, you needed to have 20% of the purchase price as a down payment. That’s not the case anymore. There are loan programs that let you buy with low down payments, or in some cases no money out of your own pocket at all….

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