How to Get a Gift Letter for Mortgage: A Comprehensive Guide
Obtaining a gift letter for mortgage is an essential step for borrowers who are receiving financial assistance from family or friends to purchase a home. A gift letter is a formal document that confirms the gift amount and ensures that the lender understands the source of the funds. This article will provide a comprehensive guide on how to get a gift letter for mortgage, including the necessary steps and requirements.
1. Understand the Purpose of a Gift Letter
A gift letter is required by lenders to verify that the funds being used for the down payment or closing costs are indeed a gift and not a loan. This helps prevent borrowers from misrepresenting their financial situation, which could lead to loan fraud or other legal issues.
2. Determine the Gift Amount
Before drafting the gift letter, it is crucial to know the exact amount of the gift. This includes the total amount being gifted, as well as any additional funds that may be provided for closing costs or other expenses related to the purchase of the home.
3. Identify the Giftor
The giftor is the person or entity providing the gift. This could be a family member, friend, or even a charitable organization. It is essential to have the giftor’s full name, contact information, and relationship to the borrower.
4. Draft the Gift Letter
The gift letter should include the following information:
- Recipient’s Information: The borrower’s full name, address, and contact information.
- Giftor’s Information: The giftor’s full name, address, and contact information.
- Gift Amount: The exact amount of the gift, including any additional funds for closing costs or other expenses.
- Relationship: The relationship between the borrower and the giftor, if applicable.
- Intent of the Gift: A statement confirming that the funds are a gift and not a loan.
- Verification: A statement from the giftor that the funds have been transferred or will be transferred to the borrower’s account.
- Date: The date the gift letter is written.
5. Get the Gift Letter Notarized
Some lenders may require the gift letter to be notarized, which means it must be signed in the presence of a notary public. This ensures the authenticity of the document and the accuracy of the information provided.
6. Submit the Gift Letter to the Lender
Once the gift letter is complete and notarized (if required), submit it to the lender along with other required mortgage documentation. The lender will review the gift letter to ensure it meets their guidelines and requirements.
7. Follow Up
Keep in touch with your lender to ensure they have received and reviewed the gift letter. If any additional information is needed, provide it promptly to avoid delays in the mortgage approval process.
By following these steps, you can successfully obtain a gift letter for mortgage and demonstrate to your lender that the funds being used for your home purchase are indeed a gift. This will help streamline the mortgage process and ensure a smooth home buying experience.
