How do I cut letters and shapes from fondant/gumpaste without it stretching out of shape? I have tried using 2 different x-acto knives with no luck. Are they not sharp enough? Or do I need to let the rolled out fondant/gumpaste sit for a little while, to dry a bit?

Thank you!

Yes if it is mixed let it dry a little. but if it's straight gumpaste remember it will crust really fast. I use an xacto but even then its hit and miss. I found sing cutters when possible is much more realiable.

Don't let it sit too long before cutting, just a minute or two or you'll get wrinkly edges. Also, when using your x-acto knife, press it down and then pull it away instead of dragging it through your fondant/gumpaste. Dragging it will stretch it. Once you've cut out your shape, you can let that dry a bit more before putting it on your cake.