RE/MAX Real Estate Guide and FAQ - Questions and Answers for Real Estate Mortgages and Financing.
RE/MAX Valley Real Estate, Boardman, Ohio

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RE/MAX Valley Real Estate

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RE/MAX
Valley  Real Estate
1006 Boardman - Canfield Rd.
Boardman, Ohio
(330) 629-9200

RE/MAX Real Estate FAQ - Buying Your Home, Working With A Real Estate Agent

Your Mortgage - Questions and Answers
'Parent Gifts & Loans'

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Do I have to disclose a parent's gift?
If you are blessed with generous parents tell the world. An estimated one-third of first-time buyers purchase their home with a loan or a money gift from their parents. Lenders will ask for a gift letter stating that no repayment of the "gift" is expected. If a repayment understanding is attached to the 'gift' it would have to be included in your debt-to-income ratio and some lenders won't allow it at all.

In addition to the letter, a lender can ask for two or three months' worth of statements for the account where the down payment funds are located. If the money was recently placed into that account, the lender may ask where it came from and request verification of that source as well.

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What is a gift letter?
If someone is willing to make a gift of funds in order for you to purchase a home, lenders will ask for a gift letter stating that no repayment of the "gift" is expected. The amount of the gift and the date funds were transferred should be spelled out in the letter, along with the donor's name, address, telephone number and relationship to the borrower.

See >> sample gift-letter

In addition to the letter, a lender can ask for two or three months' worth of statements for the account where the down payment funds are located. If the money was recently placed into that account, the lender may ask where it came from and request verification of that source as well.

Gifts -- with the proper documentation -- can be from relatives, friends, an employer, church, municipality, or nonprofit organization. Lenders often have stricter restrictions on gifts from friends and relatives other than parents. Also, if you put less than 20 percent down, some lenders may require that a portion of the down payment be your own cash, not a gift.

If you want to use a gift as part of your down payment, check with individual lenders to learn the restrictions of specific private or government-insured mortgage programs.

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