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Crowdfunding creates new opportunities for homebuyers

You've set your wedding date. Now it's time to create your gift registry. But what if you already have a toaster, plenty of serving spoons and all the bath towels you'll ever need?

Maybe you should request a more substantial gift from your wedding invitees: a down payment for a new home. Silverware sets and blenders are nice, but down payment dollars are a gift that comes with a far bigger impact.

CrowdfundingThink this is crass? Don't. More first-time homebuyers are turning to crowdfunding to help them scrape together the money they need for a down payment for their first homes. Websites such as FeathertheNest.com, DownPaymentDreams.com and HatchMyHouse.com have popped up to help marrying couples collect these funds.

"My future wife and I were living in a one-bedroom apartment in San Francisco when we started thinking about our wedding registry. We already had so many household items. We didn't need any more stuff," says Rieve MacEwen, co-founder and CEO of Hatch My House in San Francisco. "What if we created a registry that helped us save money for a down payment for a house instead?"

MacEwen, along with his wife, Erin-Marie, founded Hatch My House about five years ago. Rieve MacEwen says that in about five years, Hatch My House has helped couples collect more than $2 million for down payments. The most successful couple to date used the site to raise about $10,000 for a down payment, he says.

Not everyone approves, so provide options

This might be a new trend, but it shouldn't be a surprising one. The down payment is often the biggest hurdle that couples face when trying to buy their first home.

"People have been putting off owning a home and getting married until later in life for a variety of reasons," says Lindsay Oparowski, CEO of Miami-based Feather the Nest. "That is making a traditional registry for linens and pots and pans not functional for a lot of people who have all that stuff already."

There will be some guests, of course, who aren't enamored with the idea of donating down payment dollars. Teresa Krebs, president of DownPaymentDreams in Wilmington, North Carolina, says that this is OK. She advises her customers to set up both a traditional gift registry and their down payment registry to provide options.

"This isn't something that appeals to everyone," Krebs says. "Some people would rather go out shopping and bring a more traditional gift to the wedding. Others are perfectly happy to contribute to a down payment fund."

How to receive down payment gifts

There are specific rules couples need to follow when receiving monetary gifts.

First, mortgage lenders require that all gift funds be just that, a gift, meaning recipients aren't expected to pay back the money they receive.

Down payment gifts

There's a reason why mortgage lenders need proof that this money is a gift. If a down payment gift is really a loan that couples have to pay back, it should be counted as debt. Couples who have too much debt will either struggle to qualify for a mortgage loan or qualify for a smaller one with a more affordable monthly payment.

Lenders also need to see a paper trail that documents gift funds. Couples who receive down payment gifts for their weddings need to provide their lenders with receipts or other documents showing from where the dollars came.

Krebs says that sites such as hers have both of these requirements covered. All of the couples who register at DownPaymentDreams.com agree that all of their down payment gift dollars are funneled first into a PayPal account. The couples then receive an email receipt from PayPal for each contribution. Krebs tells her customers to keep these receipts.

And because the couples are receiving these donations as wedding gifts, it's easy for them to prove to lenders that they don't have to repay the funds.

"Lenders get more nervous when they see the big lump-sum donations coming in at one time," says Krebs, who is also a real estate agent. "These are typically smaller donations. It's not like when you receive $10,000 from one person. I've talked to a lot of lenders about this to make sure that it wouldn't be a problem for our couples. Every one told me that as long as the couples have documents showing where the money came from, it's not an issue."

(Image: Dean Mitchell/iStock)

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