Credit Card With Free Gift

[Nadal Braymiller]

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Gift funds cannot come from a credit card. That credit cards has a monthly payment and is unsecured. Gift funds Can come from a line of credit that is secured against a home but not a credit cards itself. Unless it is seasoned (happened 2 months ago) they will look at parents bank statements and see it. wouldn't be suprised if was missed by underwriter but it is not allowed. They are borrowering the funds that they do not have.

Not farfetched at all, and that is what I usually recommend when people have quite a bit of cash and want to use it for the mortgage transaction... just pay your bills in cash instead of your bank account.

If you have more money in the bank account than at closing on the last statement, and want to use the increased amount to qualify, you can just provide an internet account activity printout that spans from the closing date of the last statement to the day you print it out. You don't need to wait until a new formal bank statement is cut.

If you don't have the full amount of funds when it initially goes to underwriting, you should write a short explanation on how the funds will be raised (i.e. from your pay, etc.) so the underwriter knows what to condition your loan for. The loan officer usually can explain it to the underwriter as well.

The gift donor can get the funds however they choose. Cash advance on a credit card, taking a personal loan out, etc. The only limitation is how the borrower gets funds, the borrower cannot get a cash advance on a credit card, take out a personal loan, etc.

Not sure where you got this information, is it from a specific lender? If so, it's an overlay guideline... definitely not one that FHA, VA, USDA, Fannie or Freddie have. Actually a Google search turns up that it is from an article that Carolyn Warren has written, not sure who she is, but she is incorrect unless she is citing a specific lender's guideline. I can assure you I've closed many transactions where the donor has borrowed the funds to gift. I've had a few lenders question it at first, but after guidelines are provided to them that shows it's acceptable they've all been OK with it.

5. If the gift funds are to be provided at closing, and are in the form of an electronic wire transfer to the closing agent, then have the donor or closing agent provide documentation of the wire transfer.

6. If the gift funds are being borrowed by the donor, and documentation from the bank or other savings account is not available, then have the donor provide written evidence that the funds were borrowed from an acceptable source, not from a party to the transaction, including the lender (cash on hand is not an acceptable source of donor gift funds).

2. If the verifications provided in the Mortgage file do not show evidence that the gift funds have been deposited in the Borrower's account, the Borrower must provide evidence of the transfer of funds from the donor to the Borrower.

Now there may be other conventional non-conforming loan programs out there that do not permit the donor borrowing gift funds, it's certainly possible, but I haven't run into any of them.

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A gift card is a type of prepaid card (or other electronic access device) typically purchased by one consumer and given to another as a present or to express appreciation or recognition. Merchants and vendors are increasingly opting to use electronic gift cards instead of paper certificates because of lower costs and because electronic cards are less vulnerable to fraud or counterfeiting.4

Gift cards are generally categorized as either closed-loop or open-loop. Closed-loop gift cards, which represent the majority of the gift card market,5 are accepted at a single merchant or group of affiliated merchants as payment for goods and services and cannot be reloaded with additional value after issuance. Open-loop gift cards are branded with a payment card processor network such as Visa, MasterCard, American Express, or Discover, and are generally issued by financial institutions. An open-loop card can be used at merchants participating in the payment network and are more likely to be reloadable.6

Cards for telephone services are excluded. However, the final rule interprets telephone services narrowly, so the exclusion does not apply to cards redeemed for prepaid Internet access and similar technology services.10

In certain cases, multiple parties may be involved in a card program. For example, a retailer, such as a grocery store or a drug store, may be marketing the product and not the card issuer. Display racks at the retailer may make gift cards available as well as general-purpose reloadable cards and telephone cards; therefore, the retailer is offering both excludable and nonexcludable products. In this case, the card issuer may not always be able to verify how excludable cards are displayed at each retail outlet to ensure that they are not being marketed as gift cards or gift certificates through signage, advertisements, or otherwise.13 Recognizing the compliance risks involved when multiple parties are involved in a card program, the final rule provides that the exclusion applies so long as a certificate or card is not marketed or labeled as a gift card or certificate and if persons subject to the rule maintain policies and procedures reasonably designed to avoid such marketing.14

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