Could Buyers Count on Crowd Funding for Downpayments?
Social media appears to inspire many to creatively use today’s untraditional resources such as crowdsourcing. It has worked in some non-mortgage-related cases and probably, it will be successful in the mortgage space as well.
At least one company is bracing up to test the idea where it belongs: In the marketplace.
HomeFunded.com, an Orlando, Fla.-based startup that aims to assist aspiring homebuyers through innovative down payment assistance options, came into being earlier this summer.
HomeFunded.com founder Aaron Mighty describes the company as a crowd funding site that allows buyers “to raise a downpayment campaign” by inviting people in their social network “to contribute and share news of their upcoming home purchase.”
According to Mighty, it will increase the likelihood they actually achieve their downpayment goals.
Today’s competitive housing market is dominated by investors and hedge funds making it tougher for individual byers to enter the market, he stated in a company release.
Crowd funding through social media could help buyers “to even the playing field.” His rules include campaigning to gather funds and using these resources within 60 days the campaign is closed.
So far HomeFunded.com claims it has the support of “a collective of real estate professionals” who helped develop the strategy, and “numerous loan officers and underwriters” who work with Fortune 100 companies.
The company also provides a mobile application that enables users to take a picture of their favorite property while they are visiting with a Realtor and start the crowd funding campaign right away.
Granted, these buyers are expected to have really generous friends on Facebook.
In other downpayment-related news:
• San Francisco-based FirstREX said it has been offering the financing for up to half the downpayment on purchase loans in combination with RPM Mortgage.
FirstREX—which as previously noted in a past issue of this publication provides partial downpayments through a real estate equity sharing arrangement called REX HomeBuyer—said that program has been made available through RPM Mortgage’s California branches and probably by the time you read this it will be rolling out in Oregon and Washington.
• There may be more downpayment assistance resources than you think out there: A report last month by Carrington Mortgage Services executive vice president Ray Brosseau said DownpaymentResource.com lists more than 1,500 assistance plans administered by more than 1,000 agencies nationwide.