Ocean City Today
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Crowdfunding for home purchases available online

Real Estate Report
By Lauren Bunting | Oct 12, 2017

(Oct. 13, 2017) CMG Financial, a mortgage lender, just launched HomeFundMe, the first online platform that allows borrowers to crowdfund the down payment on a home purchase without fees and this program has the backing of mortgage giants Fannie Mae and Freddie Mac.

Until now, lenders required gifts to help fund down payments to come from close family members, employers, community nonprofits and churches. And, these down payment assistance gifts all had to come with substantial documentation. Lenders want to be sure buyers aren’t borrowing the down payment money, which would add to their debt.

HomeFundMe is different than other crowdfunding platforms in that contributions to a person’s account are strictly gifts. The amounts are small, in the $50-$250 range, and the platform can be tied to many wedding and baby registries.

“This allows you to tell your story. It allows for folks to be able to buy into your loan story, your home story,” said Christopher George, CEO of CMG Financial and vice chairman of the Mortgage Bankers Association. “Our tag line is, ‘Fund your way home.”

If prospective homeowners attend credit education courses and counseling, those borrowers can also receive grants of up to $2,500 once they’ve completed the free classes. After that, the HomeFundMe platform will match donations at $2 for every $1 raised, up to $2,500. And, those who contribute can make the gift conditional to require the money go towards the purchase of a home.

In some cases, this could help a prospective homebuyer close the gap in down payment funds that they’ve already saved, and the amount still needed to avoid private mortgage insurance. It can also help new homebuyers avoid being “house poor” after a purchase, and keep funds in savings for renovation projects.

Part of the process in creating a HomeFundMe account is speaking to a loan officer that the platform assigns you. And, when your campaign goes active, you have 12 months to close on your new home.  It’s recommended you don’t start your HomeFundMe account until you are ready to start shopping for a home. Once you receive your first gift of funds in your account, your timeline starts.

— Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin.

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