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Gift Letter

In the United States, when you decide to give a considerable amount of money to someone, you usually have to accompany your financial gift with a record proving that you do not expect to get the money back. For such cases, the Gift Letter template exists.

The Gift Letter is a document that proves the fact of transferring money from one party to another. The most important condition here is that no one expects to return the money.

It is common to use a Gift Letter when the receiving party uses the gift money to cover a certain part of their mortgage with this cash. Usually, the bank that has issued the loan for gift money asks for a Gift Letter, so the parties can prove neither of them will return the money. The party that gives the money is called a donor, and the one that gets it is a recipient (or a borrower).

What Does the Gift Letter Contain?

Each Gift Letter has to contain the following information:

  • Donor’s and recipient’s names;
  • Given sum in US dollars;
  • The statement proving that the donor does not expect to get the money back;
  • Parties’ signatures.

Depending on the Gift Letter type, you may as well add other details to the document.

Why People Use a Gift Letter?

As we have already said, people can use a Gift Letter when someone has a loan in a bank tied to the mortgage. Relatives or friends can give a considerable amount of money to this person as a present, and that money will help cover the loan (fully or partially). In this case, the bank may require proof that the relatives or friends will not aspire for the given money.

A Gift Letter serves as such proof. Without this document, the bank that provided the loan in the first place may consider that the money is refundable, and your debt may grow.

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  • AIA A305 1986
  • How to Fill Out a Gift Letter

    To make it easier for you, we introduce our detailed instructions regarding the Gift Letter creation. With our guide, you can complete the Gift Letter template quickly and effortlessly.

    Hereunder, we will take a closer look at an example of the Gift Letter designed to give a certain sum in US dollars to someone, so they can use the money to buy real estate. Please note that the structure and data you include are more or less the same for all Gift Letter types.

    • Download the Relevant Template

    Before you start completing the Gift Letter, use our form-building software to get the proper letter template. You will receive the needed file in seconds.

    • Name the Applicant(s)

    You have to introduce the recipient of your gift. It should be the same person that applies for the loan to purchase real estate.

    step 2 name the applicant(s) - filling out a gift letter

    • Insert the Loan Number

    On the right-hand side, enter the loan number that belongs to the applicant.

    step 3 insert the loan number - filling out a gift letter

    • Introduce Yourself (as a Donor)

    As the person who gives the money (or a donor), you have to introduce yourself. Write your full name in the designated blank space (as shown in the picture).

    step 4 introduce yourself (as a donor) - filling out a gift letter

    • Add the Given Amount

    Indicate the total amount of money in US dollars that goes to the recipient.

    step 5 add the given amount - filling out a gift letter

    • Define the Recipient and Relationship

    You should write the full name of the recipient. Then, describe your relationship with that person (whether you are their spouse, parent or child, brother, sister, friend, and so on).

    step 6 define the recipient and relationship - filling out a gift letter

    • Write the Subject Property Address

    As you hand your money over to cover a real estate loan, you should specify the location of the subject dwelling property. Add its full physical address, including the state, city, and postal code.

    step 7 write the subject property address - filling out a gift letter

    • Read the Following Statements

    After filling out the property address, you will see two statements that describe the gift. For instance, you should confirm that you do not expect the recipient to return the money. Read both statements attentively and accept them.

    step 8 read the following statements - filling out a gift letter

    • Define the Gift Source

    In this section, you have to explain how you obtained the money that you’re handing over as a gift. Write the income source in the relevant blank field.

    step 9 define the gift source - filling out a gift letter

    • Sign the Letter

    Both the donor and the recipient have to sign the Gift Letter.

    On the left-hand side, the donor leaves the signature and dates the letter. The giving party should also insert their full name, address, and contact details (a valid phone number will be enough). On the right-hand side, the recipient (or the borrower, as stated in the Gift Letter template), has to put the signature.

    This document does not require notarization. However, notarizing or witnessing legal forms in the United States ensures the paper’s validity. Thus, it is a good idea to notarize it.

    step 10 sign the letter - filling out a gift letter