As price tags on homes in the Denver area skyrocket, many first-time buyers are using cash gifts from parents and grandparents to meet down payments. In fact, notes Realty Times, “as of 2012, one in five baby boomers has either gifted, loaned or co-signed a loan to help children or grandchildren buy their first home.”
But such gifts are met with scrutiny by lenders. If you’re considering using gift money to help purchase a home, be aware that:
- It’s ill advised to allow relatives to simply transfer funds into your bank account. Lenders require a more official paper trail.
- Banks often require you to contribute at least 3-5% of the down payment from your own funds when making a down payment less than 20% of the home’s cost.
- Lenders may require a certified down payment gift letter or a signed affadavit asserting that the money is a gift and will not have to be repaid.
Have questions about gifting? Don’t hesitate to get in touch with us for more information.
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