Once you have decided on a goal, it is often to your advantage to identify potential roadblocks or pitfalls that could delay or prevent you from fulfilling your mission.  One such stumbling block for those aiming to purchase a home is lack of sufficient documentation.  In addition to providing the mortgage lender with copies of bank statements, pay stubs, and tax returns, lenders also need a paper trail for gift funds.  Simply having someone write a letter, explaining where the funds came from is no longer acceptable.  

Lenders generally need a letter from the gift giver’s bank on their letterhead, stating the amount being withdrawn and that the gift giver has more than enough funds in their account to cover the amount.  The letter will need to be signed and dated and the teller or banker’s business card may also need to be attached to the letter.  Then, the buyer often needs to get a printout of the cash in their account prior to and after the deposit.  Any deposits made to your account outside of your normal pay stub may need to be explained.  If possible, retain copies of all deposit checks as proof of where the funds came from, and be wary about making cash deposits to your account.   As many people may elect to give cash this time of the year, make sure you connect with a few lenders to find out how you should handle cash or gift funds.  Knowing this information upfront, may preclude unnecessary stress and headaches from occurring in your home purchase.