You and your friends may have postponed marriage to start careers, pay off student debt or just have a little fun, live like nomads and see the world. But now you’re ready to take the next big step.
And maybe a home, like marriage, is a commitment that you’ve been putting off. What’s the hold up? Saving up for the down payment, ramping up earning power, the burden of high student debt … (did we get all the biggies?)
So, what’s a young couple to do? Saving the down payment seems to be a vexing problem. You’ve been denying yourself fun and paying down your debt, but progress is slow. You think, “How am I supposed to suddenly come up with a large down payment?”
Scrap the Gifts and Parties and Crowdfund
According to a 2017 Zillow report, you and many of your friends have been spending quite a bit of money on destination pre-wedding parties … to the tune of over $13,000 per person, if you participated in just nine weddings. No one would blame you and your friends for wanting to soak up the experience, but … imagine if that money, instead of being spent on travel and gifts, was sitting in a “down payment” savings account, racking up interest?
Ask your family and friends to contribute toward your down payment. Rather than buying you a toaster that you’ll junk in a few years or sinking money into your bachelor or bachelorette party, they will be investing in a legacy for your young family.
If you are getting married, why not skip the pre-wedding parties and, instead, ask your family and friends to contribute toward your down payment? Rather than buying you a toaster that you’ll junk in a few years or sinking money into your bachelor or bachelorette party, they will be investing in a legacy for your young family.
In some cultures, wedding guests pin cash to the bride’s dress at the reception, but for most of us, asking for cash feels tacky. Today’s technology offers us more elegant and arguably more comfortable ways: online wedding registries or good old fashioned crowdfunding.
How To: Cash Wedding Registry
The first decision you’ll need to make is which platform to use. A quick search for “Real Estate Crowd Funding” will yield dozens of sites that focus only on real estate, a number of round-up articles and even a few books. Yes, it’s a thing, now. Also be sure to check out the online wedding registries that specialize in cash gifts. You can find them by googling a term like “Wedding Registry Home Fund.”
Choose a platform that feels like it would be comfortable for friends and family to use. Also, consider all of the fees involved. Crowdfunding and registry sites may take fees out of the money raised and also charge fees to donors for letting them use an online payment system or a credit card.
Plan on closing out your fund-raising campaign at least two months before you apply for pre-approval so you needn’t worry about documenting where the funds came from.
Now that you’ve got the donation site squared away, focus on your pitch. Keeping in mind that these are people you love enough to invite to your wedding, create a message that will inspire them to help you — and feel good doing it. Tell them what the new home means to you and your soon-to-be spouse. How will you use your new home? Where will it be located? If you share your dream so clearly that they feel the power of it, you’re certain to receive the support you need.
Make sure you set your fund raising goal high enough to get you into your home. How much do you need? If you are a veteran, you may only need closing costs and some reserves. If you are not a veteran, 3 percent down will be the minimum you’ll need, plus closing costs and reserves.
When do you need the money? Almost all lenders allow gifts from immediate family to be used for the down payment, but not all lenders have caught up with the crowdfunding model yet. When you submit an application, the lender will ask for two months of bank statements, and ask you about any unusual deposits listed on those statements. Deposits that predate those statements, therefore, don’t need to be explained. Plan on closing out your fund-raising campaign at least two months before you apply for pre-approval so you needn’t worry about documenting where the funds came from.
Of course, anyone contributing to your dream deserves a proper thank-you. It is old-fashioned, but consider hand-written, snail-mailed thank-you notes for everyone who donates, and a house-warming party just for them when you’ve settled into your new home.
Finally, not everyone will feel comfortable simply putting money into a pot as a wedding gift. Offer alternatives. In fact, the handy person in your new family may benefit from a registry at a local hardware store. You will soon become well acquainted with power tools and all sorts of home maintenance chores.
And congratulations on the engagement!