Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I am in the process of getting a loan. Lender asks me to explain a deposit of 6k last month. It's from various gift money (birthdays, graduations) given by various relatives from Korea in the amount of 10-100 dollars over the last 10 years. My parents kept it in the safe for me and I just took it back to the US and deposit it. I don't know how to prove something from the last 10 years... Obviously it's unrealistic to ask all of my relatives to each write me a letter for something happened over the last ten years and each provides a bank statement for me. What can I do?
If the lender doesn't count this 6k, they will think I won't have enough money for closing cost...Err so stressful.
All you need to do is show to the lender the money is NOT BORROWED. A letter from your parents will suffice. Keep it short and simple -- "We freely gave $xxxx.xx to your daughter as a gift. There is no expectation it will be repaid. It is not a loan."
The fact that it came not from another bank is not too terribly important, but in the future people should know that anytime a series of saving deposits / withdrawals can be substansiated with other banks records it makes the fact that this is not a loan all the easier to prove.
It is not particuilarly relevant that the sum came from many relatives over many birthdays and similar events so long as you can show that mom & dad gave you either a pile of cash or a mass of checks and they are not expecting anything in return (other than your gratitude ) as the lender must establish that their is nothing like another loan to cloud the title... The actual reciept from the deposit should have been kept to show that it was XX cash and XX checks and XX foreign currency, but really the lender will be happy to just have some letter that they can put in the underwriting file along with a copy of your bank statement showing the balance.
At times it seems they spend more effort on this than tracking down drug money, but the paperwork is easy to file. Just be calm and realize the rules are as much a hassle to the employees of the lender as they are to you.
I am hopefully in the last stage of being approved for a mortgage. I was told by my lender and real estate agent to just be honest:
"To whom it may concern: The purpose of this letter is to explain the $6000 deposit made to accout XXX on XX/XX/2011. For the past 10 years my parents have been saving various cash gifts given to me in their safe deposit box. On XX/XX/2011 I deposited this cash into my bank account."
They will probably want your parents to amend their gift letter to include this money. Is there some record of the safe deposit box that your parents could produce?
It shouldn't be a huge issue, unless, you are getting a conventional mortgage and don't have at least 5% into the transation.
If it's an FHA loan, you're applying for a federally insured loan that requires conclusive evidence that the funds for the purchase are not borrowed. $6000 is not an insignificant amount, so I think you need to be prepared for more than a gift letter (and it should have the HUD warning, too). In addition to the gift letter, you should go ahead and document the funds from their account in Korea (or get a letter from their banks that xxxx in Korean currency was sent from mom and dads account to your account - if the funds were wired, there's a papertrail). Getting that letter now can save you a whole lot of heartache.....as it won't be easy to get that over night.
Hold on. I usually agree with SmartMoney, but I think the potential to overstate this issue is easy to cross from concern to irrational paranoia.
The lender's underwriters build files that conform to the standards laid out by FHA or others. Those standards have shifted and become more stringent, but I know of nothing that would specifically make funds transferred or even physically carried from over seas any different than those moved from a jar in grandpa's yard.
The various files are subject to being randomly audited for compliance to standards, but that finding would fall on the originating lender NOT the borrower.
Yes, a paper trail of bank records is the "gold standard" but I have never seen a COMPETENT underwriter demand unreasonable documentation just because the source of the funds is not traceable to a normal depository institution.
It is not helpful to stoke the fears of a first time buyer...
I'm having an issue with gifted money. MIL has given us $10K in the form of a check. My lender is wanting, not only a letter that states the money is a gift and not a loan but also wants copies of MIL bank account statements showing the money coming out of her account and her balance.
I told my lender I have no issue with the letter that is fine. But making it a royal pain in the rear for someone to give you a gift is ridiculous. My MIL will not provide copies of her bank statements for this purpose. She feels as though it is an invasion of her privacy. Told my lender this and her reply was, "no problem, just don;t put it in your checking account and don;t use it to purchase the home (down payment, inspections, etc)."
We planned on using this money to help with the down payment. Do all lenders require this type of documentation?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
) as the lender must establish that their is nothing like another loan to cloud the title... The actual reciept from the deposit should have been kept to show that it was XX cash and XX checks and XX foreign currency, but really the lender will be happy to just have some letter that they can put in the underwriting file along with a copy of your bank statement showing the balance.
