Don’t have the required down payment to purchase your dream home? No problem. There’s now a service that lets you crowdfund your mortgage down payment. Whew!
A company by the name of HomeFundMe, not to be confused with GoFundMe, claims to be the “first industry approved crowdfunding service” to allow prospective home buyers to “crowdfund a mortgage down payment.”
Can I Please Have Some Down Payment Money? Thanks!
What this all means is that you can now ask people to donate money to help you make a down payment on a home, using the HomeFundMe platform.
For the record, HomeFundMe is a service of a mortgage lender by the name of CMG Mortgage Inc.
And in order to take part, you are required to get pre-qualified for a mortgage with the company. Only then can you start your crowdfunding campaign.
That means CMG Mortgage is likely wanting to be your mortgage lender. It’s a clever marketing tactic to obtain more purchase-money mortgage business as refis wane.
Anyway, the HomeFundMe campaign operates on a 12-month timeline, meaning the user must close on their home purchase within 12 months of accepting their first gift via the platform.
If you aren’t able to raise the necessary funds for your minimum down payment in time, an extension may be applied to the campaign if the “Fundraising Coach” believes the goal is still attainable.
Additionally, and this is perhaps important to the integrity of the platform, those who contribute to the cause have the option to make their gift conditional to an actual home purchase.
In other words, the recipient can’t say they need the money for a home purchase, then use it for something else if the donor ticks that box.
If the home purchase does fall through, any non-conditional funds will still be disbursed to the borrower and the conditional funds will be returned to the donor.
It Can Be Linked to a Wedding Registry
In order to successfully raise enough money for a mortgage down payment, which can be quite expensive, the company recommends linking the campaign to Facebook.
The hope is that friends will see the campaign and chip in some bucks to help their friend buy a home. After all, it’s a worthy ambition.
Speaking of, you’ll probably also be told to make a story that is compelling and perhaps heartwarming to garner interest and meet your goal.
If you happen to be getting married, you can also link the HomeFundMe campaign to your wedding registry, or just make it your entire wedding registry.
Per HomeFundMe, the average wedding guest list is comprised of 120 attendees, and the average gift is valued at $186.
Assuming everyone gives you that much and applies it toward your down payment, you’ll have over $22,000! Party!
On top of this, HomeFundMe users will be incentivized to complete home buyer education and/or housing counseling in exchange for a grant ranging from $1,000 to $2,500.
Any counseling fees are paid for by the company and HomeFundMe will also match donations at two dollars for every dollar raised up to the qualified grant limits.
This means an aspiring home buyer might be able to raise a decent chunk of change to make their home purchase possible and a lot cheaper.
As I’ve mentioned before, a low down payment can raise your mortgage payment in three ways, which is bad news for a first-timer trying to get ahead.
There is no fee to crowdfund, and 100% of the funds raised go to the recipient. It’s ostensibly free because you’ll be urged to get your mortgage from CMG Mortgage.
(photo: Joanna Poe)