What are the two primary reasons that you haven’t yet bought your own home? Well, if you’re like most first-time buyers, there are two hurdles: saving up the cash for the down payment and cleaning up your credit so you can get a loan.
If this is you, you're not alone. FOX 5 real estate expert John Adams says those two reasons are the main factors stopping folks from buying and owning their own home.
Prospective buyers could just get to work, save some cash, and clean up their credit report, but that course of action is a real challenge, especially for someone who has never done it before. The reality is that it’s probably just easier to rent.
It’s especially hard for millennials, who are saddled with huge student loan debt and a shortage of savings due to a delayed start in the employment arena.
But there's a new way to potentially make all this easier, especially for a first-time buyer.
It’s called Divvy Homes, and it’s a platform sort of like these "instant-offer" companies that will buy your home with a cash offer fast. Except instead of "buying" a home from you, they will buy a home for you
It works like this: you make an online application, get approved for a shopping budget, find an agent and your dream home. Divvy buys the house except for 1 to 2% and you sign a 36-month lease.
You can then move in, start saving money and building your credit. Later, you can buy the home or walk away (with most of your savings).
While the concept is new, there are a bunch of companies jumping into this space. Adams said he's never seen anything like it.
On Divvy's side, they start to earn a good return on their cash investment right away. Plus they get the use of your down payment and your cash savings at no charge for as long as you rent. Plus, they make a profit off the rent. If you buy the house, they have set the price in advance so they make money. And if you qualify for a loan, they get the origination fees and commissions.
If you decide to just walk away after the three years, you get to take most of the cash you have saved. However, there is a price: namely the down payment that's not refundable and a "commission fee" charged out of your accumulated savings to reimburse Divvy for having to sell the property. That fee is 1.5% of the final selling price.
Wall Street has a problem. They want to move into real estate, but can’t figure out how to do it. And there are plenty of investors ready to buy stock in any company that tries.
The magic happens with today’s low-interest rates, so Divvy has unlimited cash that costs them almost nothing, they have zero up-front costs, they earn a good steady rent for three years, they get to use your savings for free, and if you buy, their final profit is built-in.
This program is not right for everyone. But if you are determined to buy a home of your own and willing to work toward that goal over a three-year period, this solution is a novel way to make that happen. As far as Adams can tell, it looks like a win-win.
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