All I Want For Christmas is a Down Payment

Red car with Santa's hat
Summary from The New York Times

Help with a down payment

With most lenders requiring borrowers to put down at least 20 percent as a down payment –
unless using an FHA or VA loan, or purchasing mortgage insurance – the best holiday gift some
people might receive would be help with a down payment on a house.

Many Can Afford the Mortgage But Need a Down Payment

 According to a survey by Trulia, the biggest barrier to buying a home these days is
saving for the down payment. The survey, conducted over the summer, found that 51
percent of renters said coming up with money for the down payment was preventing
them from buying, while 35 percent identified qualifying for a mortgage as the stumbling
block.

Individuals May Gift up to $13,000

 Under federal tax law, each individual is permitted to give money or valuables worth up
to $13,000 to a single recipient in a calendar year. A married couple could jointly bestow
up to $26,000 a year per recipient.

Relative May Lend the Money

 According to one financial planner, there also is the option of lending a relative or close
friend the money for the down payment, or the closing costs, then forgiving the loan in a
future year. The recipient would have to pay interest on the loan until it was forgiven, at
which point it would become a gift.

Another Way to Help a Family Member Buy a Home

 Another way to help with the down payment is to pay other expenses, such as tuition,
thereby freeing up money to make a home purchase. Gifts for educational or medical
expenses are not subject to taxes, as long as they are paid directly to the educational or
medical institution.

Gift Givers Should Look Out for Themselves

 However, prior to giving the money, gift-givers should consider their own financial
picture, and they should make sure the recipient is responsible and not behind on other
payments that could be subject to debt collection.

Read the full story http://nyti.ms/rOeBF4

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