Financing Alternatives for Debt-Laden Homebuyers, Owners

Homebuyers and existing homeowners struggling to afford home payments are now being offered a variety of alternative programs to increase affordability. 

For homebuyers with too much debt, Seattle-based startup Loftium's financing strategy offers down payment assistance in exchange for Airbnb income. A similar program, HomeFundMe, helps buyers crowdsource down payment funds. Says Paul Akinmade, CMO HomeFundMe backer CMG Financial, “We see homebuying as a community event ... a modern-day barn raising.” In another program, existing homeowners are able to sell part of their home's equity to startup Point to alleviate debt. CEO Eddie Lim tells Fast Company, "The American Dream used to be ... very binary, rent or own. Why not own 77 percent? Most [startup founders] don’t own their entire company. Why not allow homeowners that option?”

These new models are a potential boon for would-be homeowners, and the mortgage market. After all, the national homeownership rate stands at 62.7 percent, down from 68.8 percent in 2005. Millennials appear to be driving the decline: In 2003, 42 percent of adults under age 35 owned a home; by 2017, the percentage dropped to 35 percent, according to Federal Reserve and U.S. Census data. Startups like Loftium could potentially reverse the downward trend.

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