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Crowdfunding Your Home Down Payment

Crowdfunding Your Home Down Payment. 0

Crowdfunding to raise money for business startups and other purposes is fairly common these days, but it might seem fanciful to crowdfund your down payment. That may be changing, thanks to a new crowdfunding platform. Here’s what home buyers should know!

CMG Financial recently created a down payment crowdfunding program called HomeFundMe. It’s designed to help home buyers attract cash gifts from friends and family. It’s important to note that all contributions are gifts, and not loans. Unlike other crowdfunding sites, there isn’t anything in it for the donors.

Participating borrowers have to jump through some hoops. A mortgage pre-qualification by CMG Financial is required before hopeful homebuyers can set up an account. And once cash gifts begin rolling in, a home purchase must be closed within 12 months. Borrowers are also provided educational resources and coaching to help them reach their goals.

HomeFundMe has won backing from Fannie Mae and Freddie Mac for a pilot program, which gives the crowdfunding concept viability in the mortgage industry. Supporters say it will remove barriers to home ownership for credit-worthy buyers who struggle with down payments.

Critics warn that buyers who rely on crowdfunding may not be financially ready for home ownership, and may be ill-equipped to handle home repairs and maintenance costs.

One note of caution: buyers who use HomeFundMe are starting down a mortgage application path with a specific lender. You might find better rates and terms if you shop around! Your Exclusive Buyer Agent can refer you to local, trustworthy lenders who will help you find the best mortgage for your needs.