I thought I’d share a little information you might find helpful with regards to down payments on home purchases. (It might save you a headache down the road!)
As you probably know, it’s crucial to come up with at least 3.5% of the purchase price for a down payment. What you might not realize is that if that down payment is in the form of a gift from someone, the sale of some personal asset, trust fund, or award, you’ll need to have documentation providing evidence of the source.
For example, a down payment from a parent (giftor) to you (giftee) will need not only a letter explaining the gift, but also a paper trail of bank statements showing where the funds originated and where they have been deposited.
Also, if you’re justifying your down payment from the sale of an asset (say a recreational vehicle, stock, or other valuables) you’ll need to have documentation which shows the bill of sale or source of the funds.
I know the last thing you may want to deal with is more paperwork, but it would be worse to have your loan delayed or even denied. Even if you’re able to provide the documentation, the time spent getting it together could endanger your rate lock or run afoul of other deadlines. Nobody wants that! My goal, as always, is a smooth transaction for everyone involved. I hope this helps!