One of the first things you’ll realize when buying a house for the first time is that there are thousands of dollars of additional costs that you’ll need to cover before you can move into your home. Though working with VA lenders in Colorado Springs will help you get the best loan for your budget, there will still be expenses you’ll need to pay for out of pocket.
Luckily, you’re able to use the money you receive from loved ones to help pay for those expenses. Here’s what you need to know about using gift funds while financing your home with a VA loan.
You’ll Need to Provide Documentation
Though VA lenders in Colorado Springs allow you to use monetary gifts to cover closing costs or the VA funding fee, you’ll need to provide documentation for those gifts. In most instances, lenders will ask you and your gift giver to complete a gift letter. This letter will outline how much money you received and should state in no uncertain terms that the money is a gift. If your loved one is offering it to you as a loan, you won’t be able to use it this way.
The letter should also show the date of the transfer of funds, the address of the home you’re trying to purchase, and the name of the recipient(s). They’ll also need to provide the lender with proof that the funds came from their bank account. Most lenders will accept bank statements for several months prior to the transfer of funds. This proves that the money came from the donor and not from some other source.
Keep Track of the Check and Deposit Receipt
Once you take possession of the funds, you’ll need to keep track of the deposit receipt as well as a copy of the check that the donor gave you. This copy can be a scanned document or the physical check itself if you deposited the funds with your smartphone. Almost all VA lenders in Colorado Springs will ask for proof of the deposit as part of your application.
It Can’t Be Cash
Since documentation is so important, you won’t be able to use cash gifts to help cover VA loan fees and closing costs. If your loved one wants to give you cash, ask them to deposit it and write a check to you.
No amount of gift money can compensate for working with the wrong VA lenders in Colorado Springs. Spare yourself the frustration and apply with Mortgage Solutions Financial today.