As published in Scotsman Guide's Residential Edition, July 2011.
Starting a life together is an exciting time for couples, but it can come with hefty financial commitments. In many cases, it can be challenging — if not nearly impossible — for newlyweds to save the money necessary to buy a home. This is especially true since the return of conservative underwriting standards that require larger downpayments.
Here’s the good news: A wedding is one of the few events where dozens of guests shower their hosts with gifts. Homebuyers hoping to avoid the typical barrage of plates, glasses and cutlery now have a choice. They can instead use the occasion of their wedding to ask the closest people in their lives — their wedding guests — for help with perhaps the most-important purchase of their lives.
Mortgage brokers and loan originators can explain the concept of downpayment registries to their clients and help underwrite mortgages that use these gift funds. These registries can be especially logical for couples who already live together and have collected a wealth of household items during their time in rental accommodations.
On the other hand, many people will hesitate — at least at first — to ask wedding guests for cash. This is where downpayment registries become especially helpful.
A downpayment registry offers couples the option of directing guests to a website where they can perform a secure transaction and get a glimpse at what sort of home the couple is thinking of buying. The couple can post homes they like or are considering and show neighborhood information. Doing so can help involve wedding guests in the process and make them feel connected to the purchase. In addition, downpayment registries also can deflect some of the criticism couples might otherwise experience asking for cash.
A typical downpayment registry exists online. Often, the operators take a small percentage of gifted funds in return for offering a tasteful, convenient and secure way to accept the gifts. A registry also eliminates the risk of misplaced or stolen checks and lets guests use a credit card.
Some registries offer other services as well, including customized wedding websites and online organizational tools that can help the bride and groom manage their guest list and thank-you notes.
A well-run downpayment registry also will help couples organize their gift funds and account for them appropriately during the loan-application process. Gift funds can be listed individually or grouped together into a lump sum.
Mortgage brokers and loan originators can offer additional help by explaining the underwriting rules pertaining to gifted funds. Depending on the time between the wedding and the home purchase, gifted funds may or may not need to be called out when applying for a loan. Typically, a gift letter will be the best choice for larger sums.
If you’re looking for a new way to increase your business, start by finding out more about downpayment registries and how they can help you attract young couples looking to marry and buy their first home.
Patricia Kiteke is the co-founder of Home for the Honeymoon (homeforthehoneymoon.com), an international online downpayment-registry service. Realtors by trade, she and her business partner, Christina Carrick, came up with the idea of a wedding registry geared toward homeownership instead of traditional household items.
They hope to help couples afford their dream home sooner, as well as to reduce the environmental impact of unnecessary gifts and consumer items. Reach Kiteke at firstname.lastname@example.org.