Reply to Buying a first home - did you get the downpayment from your family?

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[quote=Anonymous][quote=Anonymous]It used to be "Illegal" to use gift money for the down-payment.  The reason was that it showed to the mortgagor that you could not afford the house on your own.  So if you were using parental money for any aspect of the financing, you were required to mention that in the application.  If you didn't, the mortgagor could call the loan.  The rule makes sense from a mortgagor's position -- they want to ensure that you are financially stable and able to make your monthly payments.  I have no idea if this is still the rule, but I would think with the mortgage crisis, the rules would have been tightened even more.  When we bought our first home we had a second mortgage from my parents which was specifically NOT recorded or disclosed because the mortgagor could have refused the applicatio or called the loan if it knew about it.  It was a private understanding and we paid it off ASAP.  Same with the down payment - I needed to demonstrate where it had come from so the mortgagor knew I was financially solid.  You should, by the way, get pre-approved or pre-qualified by a bank before you start looking.  Sellers love to see that you are financially set and ready to go.
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A gift for a down payment is not illegal as long as it is disclosed and a gift letter is signed. What you described as having done - the second mortgage from your parents not disclosed to the lender - that was and is most definitely illegal.[/quote]

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