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I saw this thread and had a question. My sister is buying a house but does not have the full downpayment amount, so my parents are going to help her out. They are going to take out a home equity line of credit and then use that money as the gift for my sister. Is that allowed? For example, they will take out a loan under their name for say $20k and then write a check to my sister for $20k. She will then use that as the downpayment and my parents do not expect her to pay that back.
So its kind of like someone else taking out a loan and giving you that loan money as a gift. Does the bank care where the donor's money came from?
Why would you think the previous answer doesn't apply here too? Money from parents is money from parents. It's a gift if not seasoned. If you don't have the required down payment and someone else has to pay it, you have to supply more paperwork of a gift letter and everything else already mentioned.
I just closed on a house (NC) where I was the only person on the loan but my fiancee contributed towards part of the down payment/closing costs. She did not have to provide any paperwork/gift letter (and since she wasn't on the loan didn't have to provide any bank statements, paystubs, etc.). I had asked twice to confirm that was the case, because after all of the other information they asked for I figured they'd want to know where that was coming from as well. But all I was told was as long as it was a certified check it didn't matter where it came from. Although I don't know if I had to have had that much money in my accounts (I did, barely) or not, or of course if this is the case anywhere else.
Although I don't know if I had to have had that much money in my accounts (I did, barely) or not, or of course if this is the case anywhere else.
Since you showed you had the money in your account, there was no need for them to question where any money was coming from. That's completely different than not having enough funds and getting them from somewhere.
Since you showed you had the money in your account, there was no need for them to question where any money was coming from. That's completely different than not having enough funds and getting them from somewhere.
Could be...they never asked anything about where the down payment was coming from, but of course they did have all my bank statements so they knew how much was in there. Maybe the OP has enough in his/her accounts as well but doesn't want to spend it all and of course not many people would turn down free money.
I just closed on a house (NC) where I was the only person on the loan but my fiancee contributed towards part of the down payment/closing costs... But all I was told was as long as it was a certified check it didn't matter where it came from...
did that money stay in your account for 2 months prior to closing?
did that money stay in your account for 2 months prior to closing?
I did make a pretty large purchase (which I told the LO about) between when I first got pre-approved and closing, but I think I technically still had enough in my account to cover the down payment/closing costs (but probably would've had about $50 left).
Gift funds require conclusive proof of where they originated. If the borrower has a cashier's check for 10K from their parents, you need to prove the funds going out of the parents account. You must prove the funds in the buyer's account are one and the same as the funds the parent's "claim" to give. I typically set it up with a letter from the donor's bank and save myself a ton of heartache.
Gift funds require conclusive proof of where they originated.
You must prove the funds in the buyer's account are one and the same as the funds the parent's "claim" to give.
AND that the parents can afford to GIVE it away.
(no back channel private deals making it another loan you'll have)
But is it true anywhere else that if the borrower has enough money in their accounts and just doesn't plan on using it all for the downpayment that they can get a certified check from elsewhere to use at closing?
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