Gift Letter
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Definition of 'Gift Letter'Written correspondence to a lender stating that money received from a friend or relative is a gift. Gift letters typically come into play when a borrower has received assistance in making a down payment on a new home or other real estate property. Such letters also explicitly state that the money received is not expected to be paid back in any way, shape or form. |
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Investopedia explains 'Gift Letter'Gift letters are important because, in general, lenders tend to frown upon borrowers using additional borrowed money for a down payment on a home or other property. "Gifted" money, however, is a different story. This is why the letter must reference the fact that the money is, in fact, a gift and not a loan. Furthermore, the letter must be written by the gift giver to have any validity. One's relationship with the receiver is also disclosed in most gift letters. |
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