How to Help First-Time Homebuyers Increase Their Down Payment With HomeFundIt
Forward Movement Group |
Coldwell Banker West Bend
Greater Milwaukee, Wisconsin
What is the top issue typically faced by your buyers today?
Troy Hermanson: The largest buying segment demographically is millennials, a majority of whom are first-time buyers. Saving for a down payment is the top issue for them because home prices are going up, and rising rent plus student loan payments only make it harder. While we meet many prospective buyers who are mortgage-ready, nearly every buyer could use a larger down payment.
What are you doing to help them over that hurdle?
TH: About 35 – 40% of our first-time buyers receive down payment gift funds from parents. But using those gifts can be a major hassle—paper checks, paper gift letters, seasoning and financial statements—so buyers are reluctant to ask relatives for help, even though it’s allowed. When we meet with these types of buyers, we always bring up HomeFundIt, an exclusive Fannie Mae- and Freddie Mac-approved program available through CMG Financial and its joint venture partners. With a HomeFundIt campaign, our buyers can receive down payment gifts from anyone (family, friends or anyone else in their network) online, via debit or credit card, with no offline paperwork, taxes or fees. It works with any conventional loan, including the 3% down-payment programs, and it is a gamechanger. Since anyone can give online, it opens doors to a larger down payment. Even wedding guests can now help with just a few clicks.
What other aspects of HomeFundIt benefit buyers?
TH: With HomeFundIt, nearly all of our buyers qualify for CMG’s $2-to-$1 match on down payment gifts, up to $1,500, toward loan closing costs. Many of them also use HomeFundIt’s unique UpIt program, which consists of over 1,000 top online retailers who pledge an average 7.5% of each purchase back toward the down payment. Essentially, the program has two ways to build a bigger down payment—gifting and shopping.
What’s the net result for your buyers?
TH: Using HomeFundIt’s online down-payment gifting helps our buyers work from a stronger position in a busy market. Obviously, it helps improve their buying power—especially if they have to increase their offer to compete with multiple bids. It can even help them build reserves that they might need for future repairs, especially if the seller pushes back on items that come up in the property inspection—something we’re seeing a lot more in today’s tight market.
How are you using this to grow your business strategically?
TH: We set up a HomeFundIt real estate portal, which is a free branded website that allows our buyers to easily start an online down payment gifting page that features us. It comes with some great marketing tools that allow us to attract more buyers, like branded testimonial videos to share on social media, to make new buyers aware of the program. We use it as a real differentiator since it shows that we’re committed to helping first-time buyers be more successful in buying real estate, and we have a branded program that really delivers.
Doug Nesbit is director of affinity partnerships at CMG Financial. For more information, visit www.homefundit.com.