We know that when you live and work in beautiful southwest Colorado, it is hard to find a home that you can afford. HomesFund has several mortgage products to help you achieve your dream of homeownership.
A shared appreciation loan requires no monthly payments. Repayment is due in thirty years, at the time of resale or transfer of the home, if you cash out refinance, or if the home is no longer your primary residence. At that time, the original loan amount must be repaid along with a pro-rata share of the net appreciation. These loans help you bridge the gap between the mortgage amount you can afford and the price of a home. A shared appreciation loan does not cover the full amount needed to purchase a home.You will need to qualify and secure a first mortgage from your bank/lender. Shared Appreciation loans typically range from $15,000-$50,000.
Here’s a Shared Appreciation Loan Example
Assume a homebuyer wants to purchase a $250,000 home and is able to come up with $5,000 in cash for the down payment. Working with a local lender, the homebuyer qualifies for a first mortgage in the amount of $220,000. HomesFund provides a $25,000 shared appreciation loan, which is 10% of the purchase price.
Now let’s assume the homeowner sells the house after 10 years for $350,000, earning $100,000 in appreciation. In return for initially receiving the HomesFund loan with no monthly payments, the homebuyer now pays back the original $25,000 loan plus 10% of the appreciation of the home ($10,000). The seller receives the remainder of the net appreciation ($90,000 plus equity built through principal payments on the first mortgage loan).
Building Wealth Loans
This unique product eliminates the need for costly mortgage insurance. These loans have standard monthly payments. However instead of paying a monthly mortgage insurance premium, your payment goes towards paying for your home. HomesFund can provide a Building Wealth loan up to 17% of your purchase price, bringing your first mortgage down to 80% of the purchase price. Homeowners can avoid mortgage insurance premiums that can be $150 a month or more.