Millennials are buying homes later in life or forgoing the purchase altogether compared to previous generations. Between student loan debt, the high cost of living in large cities, and rising housing prices, buying homes has become less practical for young people, according to Investopedia.
Nearly 70% of millennials identify saving for a down payment as the biggest barrier to purchasing a home, according to Bank of America’s 2019 Spring Homebuyer Insights Report. When entering the job market, college graduates with student loan debt must save for an average of 12 years to afford a 20% down payment, compared to 7.6 years for those without student loan debt. For millennials without a college degree, that number rises to nearly 17 years, research from Apartment List finds.
Crowdfunding could be the means to make owning a home a reality for millennials.
Touting itself as the first crowdfunding platform for homebuyers, HomeFundIt offers millennials a way to enlist friends and family to help fund their down payment and other closing costs associated with owning a home. Once they complete a conventional financial agreement with a bank or a mortgage lender, millennials can tap into their networks to start saving.
HomeFundIt offers aspiring young homeowners two ways to boost their savings:
Crowdfunding. Homebuyers can encourage friends and family members to donate to their fund directly. They can tap into their networks by sharing a personal story on social media along with the link to the down payment fund. There are no transaction fees, and funds are available immediately. The program also gives young homeowners a grant of up to $1,500 for closing costs and offers free homebuyer education. The crowdfunding option is limited to one year before buying a home.
Cash-back rewards. The program, called UpIt, allows the potential homebuyer, their friends, and family members to have a portion of the money they spend on everyday purchases placed in a savings account for a down payment. Up to 20% of everyday eligible purchases at participating retailers such as Walmart, Macy’s, or Expedia are applied to the crowdfunding goal. The homebuyer doesn’t need to be prequalified, and there’s no time limit on when to have the funds raised. The money is available within 24 hours.