I hope you had a wonderful weekend and I am sure you all worked hard as most of us will be relaxing in front of a television on Sunday afternoon.
Gift funds are a big deal right now, and I want to make sure you know the steps when your clients get a gift for their down payment.
On a Primary residence or secondary residence purchase, a buyer does not have to put any amount down out of their pocket, and the total amount of the down can come from a gift. Gifts are not allowed on investment property, and if your client is getting a conventional loan on a 2-4 unit property, they must put 5% of their funds down on the property.
A gift can be provided by a relative, a fiancé, fiancée, or domestic partner. The donor may not have any affiliation with the builder, developer, the real estate agent, or any other interested party to the transaction.
We would need a gift letter that specifies the following:
the dollar amount of the gift;
the date the funds were transferred;
include the donor’s statement that no repayment is expected; and
indicate the donor’s name, address, telephone number, and relationship to the borrower.
We need to verify that the donor has sufficient funds to cover the gift. We would need proof of the following:
a copy of the donor’s check and the borrower’s deposit slip,
a copy of the donor’s withdrawal slip and the borrower’s deposit slip,
a copy of the donor’s check to the closing agent, or
a settlement statement showing receipt of the donor’s check.
When the funds are not transferred before settlement, the lender must document that the donor gave the closing agent the gift funds in the form of a certified check, a cashier’s check, or other official check.
Now the fun one. Your client is buying an investment property, and they have 15% down, but Mom is going to gift them the 10% needed to buy the investment property. NOPE! So what do we do here? Mom can loan them money as a 2nd mortgage on their house and then use that money as the down on the new investment property. Yup, that works!
One more fun one – Client has cash and needs to use the money for their down payment. They can give the cash to Mom, and Mom can gift the money to them with a check.
That’s enough fun for today.
Last week was another rough week in the interest rate world. Interest rates are still in the wonderful range, and please let your clients know that in the past 50 years, interest rates have spent 12 months under 3%, 16 months between 3%-3.5%, 55 months between 3.5-3.99%, and 517 months over 4%.
30-year Government Loans (FHA / VA) are in the low to mid 3’s
Conventional Loans up to $647,200.00 – mid to high 3’s
High Balance Loans $647,201.00-$ 970,800.00 are in the mid to high 3’s and low 4’s.
Jumbo loans above $970,801 are in the high 3’s. We can do low 4’s with as little as 10% down. We can do 1-year findings on these too!
5/1, 7/1, 10/1 Arms are in the high 2’s and low 3’s!
Bank statement loans – They are available with 10% down again! low 4’s to low 5’s depending on down and credit score.
Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the mid 4’s.
0 down loans are in the low 4’s – 620 credit score min right now! Mid 3’s for the most part up to $670,000.00 Price.
0 down Jumbo to 1.2 Mil – 700 credit score – call for a quote
Private Money lenders – hard Money Loans – 35% down!
No Ratio Loans 30% down
Debt Service Coverage loans with as little as 25% down
Bridge Loans – are typically 4.99 – 5.99% with limited fees – But they get you where you need to go!
Interest rates are subject to change without notice! Above are LA County Loan Limits.
I will be around all week, and I hope to hear from you! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!