News posted On July 11, 2018
Reese and Kyle Rademacher weren’t sure how they would afford a down payment to buy a home until their real-estate agent mentioned an offbeat idea: crowdfund the money from friends and family.
Mrs. Rademacher, a 28-year-old construction technician, set up an online profile with a program called HomeFundItTM to solicit donations. Her parents and a few others responded, and in March the Rademachers closed on a $320,000 home in Cheyenne, Wyo.
HomeFundIt, a service launched by lender CMG Financial last year, is among a growing suite of services that help borrowers cobble together the funds to buy homes. These companies -- startups and established players in the housing market alike -- say they’re offering options for borrowers who have good credit and income but are struggling to save.
Rising consumer debt and high prices have made it tough for first-time buyers to save for a home. Nearly 40% of renters ages 25 to 34 said they were saving nothing each month for a down payment, according to a survey last year by rental-listing company Apartment List.
About 400 borrowers have used HomeFundIt to help buy homes since the program launched in October. […] Friends and family can also make their gifts conditional, meaning borrowers won’t get the money unless they actually purchase the home.
Mrs. Rademacher said she felt uncomfortable at first asking for help through HomeFundIt. But the Rademachers’ budget was tight after paying for their wedding, and a credit union had already denied their mortgage application because they didn’t have enough in savings.
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