borrowing from credit card to pay down payment?
My situation is a little complicated. My financial subject has been removed after the bank checked that I had enough saving for my down payment. However we can't complete the transaction until two months later since there are tenants currently occupying the house. And during these two months we had to use the saving, which was supposed to pay the down payment, for other more urgent issues.
So basically we won't have enough for the down payment on the completion date.(will be in next month). My question is, can I borrow some money from my credit card for the down payment in this case? Is it legal to do this? The lawyer is going to ask me for a bank draft with the down payment amount. I am going to transfer some fund from my credit card(borrowing) to my saving account (TD bank) and get the bank draft. Is it feasible? If we fail to pay the down payment, we are going to loose the $5000 deposit.
Sorry maybe I didn't make it clear enough when opening up this question.
I can get the money back I have used around one week after the completion day. So borrowing from the credit card is just temporary. I will definitely pay that off within one month after the completion day.
- Glenn SLv 71 decade agoBest Answer
You can't borrow a down payment for any government insured loans (FHA, VA, Freddie Mac, Fannie Mae). On any of these loans you are required to provide "proof of funds" and sign a document saying that the down payment was not borrowed. Proof of funds require you to show were your down payment came from usually with 3 months of back bank statements or other financial documents like from a stock brokerage account/sale. You can't come in and say that you got the cash from your mattress.
A relative can give you the down payment but you and the gift giver must sign a document saying that it is strictly a gift and is not to be paid back.
- Genuine GuidanceLv 71 decade ago
The thing is, though, they will run another credit check on you and if you have put too much debt on that credit card, and it throws off your debt/income ratios, you could end up with no loan.
They may also wonder where the big chunk of money came from that was put into your account right before closing.
- Anonymous1 decade ago
You would be better off to get a "gift" from a relative. Pulling funds from your credit cards could be considered long term debt and impact your abillity to qualify. With a gift of money, you will need a letter that states you don't have to pay it back, that makes it a "gift", not a loan. But of course you are paying it back.
- nomoLv 51 decade ago
No,it is not legal. At closing you are asked to sign an affidavit stating your finances have not changed since the initial report and loan approval. You will be guilty of fraud if you do not tell the truth.
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- Anonymous1 decade ago
Borrowing your down payment is a near sure way to kill your loan approval. The lender WILL find out.
- Carolyn DLv 51 decade ago
It's legal. However, credit card companies love it because the interest rate is a lot higher than a regular purchase. Unless you pay it back right away you will be paying a LOT in interest.