‘Tis the season of giving; so what better topic to blog about than gifts used toward the purchase of a home.
Gifts are allowed on primary residences and second homes, but not on investment properties.
To qualify, a gift must be made by a relative. A gift letter will need to be executed by both the donor and donee stating their relationship, the amount and date of the gift, from what account the gift is made, and that no repayment is expected.
Documentation of the gift will need to be provided if the gift is by check; a copy of the canceled check.
If the gift is a transfer, a copy of the donor’s and donee’s bank statements showing the gift deposited into the donee’s account and the updated balance with the gift will be needed.
A gift of equity can be used where one relative is selling the home to another relative.
The down payment can be gifted by the seller to the buyer in the form of the equity in the home; thus, the buyer does not have to provide cash for the down payment.
If you are considering a gift for the purchase of a home, contact us and we can help you!
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Counsel Mortgage Group®, LLC
AZ MB #0909580
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John Rapasky is the President of the Counsel Mortgage Group, LLC. Copyright © 2017 Counsel Mortgage Group®, LLC.