One of the first things many newly married couples work to save for, is their first new home together. However, as most of us know, saving enough money to cover the downpayment and associated closing costs can seem a lot like trying to climb to the top of Mount Everest. For example, in the San Diego area,your closing costs on the average home (cost$580,000) can be as much as $200,000 including moving costsand additional fees.
Let’s Talk Wedding
Since time in memorial,the couple getting married has been the recipient of wedding gifts that include a wide variety of items. In many cases,the itemsare duplicates or simplythings the couple has no use for. Some family members will give the newly married couple an envelope with cash or a check.
Today’s couples are looking at creating a “down payment” fund, one that lets their guests contribute cash towards the down payment on their home. One of the reasons this trend has begun to grow in popularityis that many couples today are already cohabitating and have most of the things they need to furnish their home, the only thing they reallyneed is a home of their own.
Consider this, according to the latest statistics, the average wedding in the United States has approximately 120 guests. These guests give the couple gifts averaging out at $186.00 per gift. If all of the giftswere turnedinto cash, the average couple could conceivably walk away with as much as $22k that could be puttowards the downpayment on their first home.
What About HomeFundMe?
HomeFundMe is just one form of crowdfunding, but in recent years it has grown in popularity as it allows virtually anyone to contribute cash moneytowards the happy couple’s down payment. A person can give the money with or without conditions. For example, you could give to the fund with the express condition that the moneymust be spent on the down payment for a new home or be returned. Alternatively, you can give the moneyunconditionally, allowing the couple to spend the money as they see fit.
According to a recent article in the Wall Street Journal, since HomeFundMe first opened for business, there have been more than 400 people who have raised an average of $2,500 towards their down payments. Those who used HomeFundMe then went on to use some of their own money plus the money raised to achieve their goal of homeownership.
In the interest of making things even easier, there are several programs such as Fannie Mae and Freddie Mac that require as little as 3% down or FHA that requires 3.5% down designed to help make it easier for first-time homebuyers to realize their dream. For active-duty members of the military and veterans, the VA Loan program typically requires no down payment at all and severely limits the number of closing costs the buyer must pay. If you know how to work the system and what to look for, you should never have to worry about paying a huge20% down payment to get into your new home.