First-Time Home Buyers Guide: Part 5 of 15
Are You Gifted?
How to handle receiving gifts to buy a home.
Gifts are great to get on your birthday or the holidays, but they’re even better when you get them to buy a house!
It’s pretty common for people to get some money “gifted” to them by mom, dad, grandma, grandpa, or even loaded Uncle Lou. (He just goes by Loaded Lou to his buddies, but that’s Uncle to you, especially if he’s giving you some money.)
Anyhow, that’s awesome if you get money from family, or even friends, to help you buy a house! However, you need to make sure you bring that up with your mortgage advisor up front. Just because you were either promised the money or were already given it and it’s sitting in your bank account doesn’t mean the lender will be okay with it.
They’ll probably be fine with it. Like I said, it’s common, but you need to let them know ahead of time. You’ll also need to document where the money came from. A lot of times they want the money to be “seasoned,” which basically boils down to being in your possession for a certain period of time. They’ll also want something in writing from whomever gave you the money stating it’s a gift, not a loan.
It might be a little awkward pushing your family or friend to give you the money ahead of time and to sign something saying it’s a gift, but it’s just how it works. So, if you anticipate having trouble getting the person lending you money to give it to you ahead of time or to put something in writing, it’s best to work on that as soon as possible.
Also, there’s a difference between being promised money to help you buy a house and actually receiving it. There have certainly been some upset buyers who were promised money, and it never panned out. So, it’s better to make sure you have any gifted money all tied up with a pretty bow in your bank account before you truly start banking on it.