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GIFT AS DEPOSIT
If you’ve been searching for a real estate loan, you know that a bank considers any loan you already have as a minus. It’s not considered as an asset, but as a debt that must be repaid. However, what if the cash on hand is a gift?
Say you are fortunate enought to thave aprents who want to help you buy the home you’ve always wanted. They offer to make you a gift of $20,000 to go toward the deposit. In this case, you are fortunate in two ways. Under present tax laws, each parent is allowed to give a child $10,000 ($20,000 for both parents)as a gift without the child having to declare it as income.
In approving a loan, the bank will look to the value of the property, the amount of the downpayment, how the downpayment funds were acquired and your ability to repay the loan.
As long as you submit a letter with your application that the money from your parent is a gift and not a loan, most lenders will accept the money as a downpayment.
If there is anything we can do to help you in the field of real estate please stop in at EILEEN M. DAY, Realtor, The Clopton House, Washington, Va. 22747. Phone 675-3033. We’re here to help.
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