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City of Boulder Affordable Homeownership Program – Buyer (es)
City of Boulder Affordable Homeownershipon 22 January 2014
Transcript of City of Boulder Affordable Homeownership Program – Buyer (es)
Used with the Permanently Affordable Program
Grant helps to cover up to 5% of purchase price
Amount granted depends on closing costs and your lender's requirement for down payment
Buyer's funds are applied first, and then grant covers the gap
Amount is determined after contract has been written and agreed upon and closing costs have been confirmed; funds are wired to closing
Permanently Affordable Homes (Homeworks)
Homes listed on our website
Below market rate prices
(maximum sales price is advertised)
Must be sold to buyer qualified by the City
(income and assets)
Homes remain permanently affordable in perpetuity
(no buy out of the affordability restriction)
Shared Appreciation Loan
Used to purchase a market rate home
Deferred loan for up to 15% of the purchase price
(max loan of $50,000)
No payments required on the loan for 15 years, or until a sale
Property must be within the city limits
Home remains a market rate home
(resellable at market rate in the future)
Calculating the Grant
Loan Pay Back:
Purchase price: $100,000
Mortgage loan: $95,000 (5% down)
Closing Costs: $6,000
Balance at closing: $11,000 ($5,000 down payment + $6,000 closing costs)
Available Buyer Funds: $6,500
Solution Grant Award: $4,500 (4.5%)
Grant not repaid BUT
Amount subtracted from future resale price (Base is now $95,500)
Adjusted resale price used for annual appreciation calculation ($95,500 x annual appreciation percentage)
$200,000 Purchase price
$30,000 H2O Loan used for 15% of purchase price
15 years pass with no refinance or re-sale
$100,000 Appreciation earned after 15 years
$45,000 total owed: $30,000 original loan + $15,000 appreciation ($100,000 appreciation x 15%)
This is a balloon loan (total due at 15 years or resale)
If the home depreciates the original loan amount is still due--no discount is given for depreciation
Gross Annual Income By Program
Number To Live In House
Calculating Assets: Starting Point
Exempt Some Retirement
Requirements For All Programs (Homeworks, H20, and Solution Grant)
Child care expenses, if incurred in order to work, can be deducted
In some cases, medical expenses if more than 3% of your gross income (not including insurance premiums)
All income must be documented to be counted
Step One: Identify your baseline:
a) $55,000 for Low-Moderate Income or H2O
b) $140,000 for Middle Income
c) $140,000 Permanently disabled
d) $85,000 Recently divorced
e) $85,000 Retired (City's definition of retirement:
Age 65 or older,
No longer in primary line of work, but if working earning less than $11,500 annually
Receive social security, retirement income, or live off assets
Complete the city orientation (congratulations!) and the full-day homebuyer class
One applicant must work at least 30 hrs/week (unless retired or permanently disabled)
Have a minimum of $2,000 cash to bring to the transaction
Secure a first mortgage loan
Have a total monthly debt to income ratio of less than 42%
Cannot own another home at time of purchase
Must owner occupy your property
Number of bedrooms may only exceed the number in household by one
Must have a work history of at least one year in most cases
Must be a first time homeowner (cannot have owned a home in past 3 years, unless divorced in last 3 years)
Must work within the city limits of Boulder
Home that you will purchase must also be within the city limits
Down payment funds are not committed until the City has reviewed the property, inspection report, appraisal and Funding Partners has reviewed the application.
Shared Appreciation Loan (H2O)
Add $15,000 for each additional household member
Add Family Members
Exemption per Household:
$30,000 Under 40 years old
$55,000 40 to 55 years old
$110,000 Over 55 years
Exempt Some Downpayment
Max that can be exempted is 20% of purchase price if 20% or more is put down
If 65+ years and fit the city's definition of retired, all of the downpayment is deducted (home may be paid for in full)
Retirement assets in excess of limits ($30k, $55K, $110k) will be counted as regular assets.
Additional Requirements for H2O
Are There Ever Exceptions to the Requirements?
Never exceptions to the income limits
No exceptions can be granted for H20
Exceptions can be made for other program requirements if justified and approved through the exception request process (Homeowner Committee and staff)
A letter needs to be submitted with your application documenting the request, and the reason that the exception should be considered
You will sign the "Permanently Affordable Housing Covenant" at closing
The Covenant defines your rights and responsibilities.
Annual appreciation that can be earned (1-3.5%)
Capital Improvement and Capital Update credits
Owner occupancy and rental restrictions
To whom can the home be sold in the future?
How much can you sell it for?
How will it be marketed?
Owning a Permanently Affordable Home
Permanently Affordable Home
How to Calculate Selling Price
When you sell or refinance your home the city will calculate a value
Original Affordable Purchase Price (minus Solution Grant)
+ Annual appreciation
+ Approved capital improvements or upgrades
+ $650 closing cost allowance
+ Cost to sell (2.5% Realtors commission split)
$550 for marketing if for sale by owner
= Maximum Resale Price
Apply for and be pre-approved for a mortgage (total debt to income ratio not to exceed 42%)
Turn in the city application (including all requested documentation)
Attend orientation and homebuyer class
Select a realtor and start shopping for a home
After You Apply
Enter a Lottery or Make An Offer
If your application is complete, you will receive a “preliminary certification” letter within 2 weeks. You're now eligible to enter lotteries and/or go under contract.
How long do I have before I have to purchase?
You should not rush your home buying process (though you should be ready to buy if you're applying).
Your Realtor will help you to balance your wants and needs with your price point.
Preliminary program certification is valid for 6 months.
Recertifying is free if completed by the deadline.
Homes go through a required 30 day marketing period (this will also happen if you purchase an affordable home and sell it in the future)
No offers/contracts during marketing period
Interested buyers submit Lottery Entry forms after seeing the property
At the end of 30 days a lottery is held
The lottery winner has 24 hours to go under contract
Homes that do not go under contract at lottery are available for immediate offers
1. Live and work in Boulder and have been income
certified for 1 year
2. Live and work in Boulder
3. Work in Boulder, income certified for 1 year
4. Work in Boulder
5. Live in Boulder, income certified for 1 year
6. Live in Boulder
7. Have been income certified for 1 year
8. None of the above
Some homes also have a minor dependent or accessibility preference
303.441.3157 #2 - firstname.lastname@example.org - www.boulderaffordablehomes.com
MY NAME IS
800 Laramie Blvd, Unit B
Max Selling Price: $138,415
1 Bed, 1 Bath
$1,116 - est. monthly PITI + HOA
Look for listings like this in the presentation: they're for sale now!
+ $200 HOA due
+ $100 student loan
+ $200 car payment
+ $ 25 min. credit card payment
$2,800 full-time job
+ $ 500 weekend job
Please Sign In Up Front - Get Credit for Your Attendance
Finding Your Home
Q: Can I own a home or be on a home's title, even if I don't live in it?
A: No, this is a one-home-per-household program. If you currently own a home you will have to sell before you can close on an affordable home.
Q: Do I have to work with a Realtor?
A: No, but we recommend it. Your realtor promotes your sole interest in the transaction. We have realtors listed on our website who have agreed to work for a reduced commission in order to make the sale more affordable, though you may choose any realtor with whom you'd prefer to work.
Q: Do I have to work with a lender?
A: Yes. A mortgage application and preapproval letter are required. Private financing is not permitted. Those that can afford a home without a mortgage are ineligible (unless retired).
The sales price is restricted:
Well below market rate
(Inclusionary Housing Ordinance + developers)
Annual appreciation is limited (1%-3.5% annually, based on CPI or AMI) so that future buyers can afford to purchase
Limits on credit for improvements/updates
Limits on sales costs (realtor fees)
Example: Rosewood Development:
3 BR/2.5 BA/1,558 SF Affordable: $179,900 Market Rate: $412,000
$75,000 ($580/month) for a studio condo
$375,000 ($2,000/month) for a 4 bedroom single family home
How the homes remain affordable
The City does not provide real estate services
Schedule showings and help evaluate properties
Manage closing timeline and tasks
Negotiate price, repair items, payment of other costs, closing dates, etc.
Develop and review contracts
List of realtors on our website - do not have to use - use anyone you like
WELCOME DARRIN HARRIS FRISBY!
Eighty 30 Realty
The City does not provide loans - you will need to find a lender to work with.
Help determine how much you can afford
Estimate monthly payments
Estimate closing costs
Help evaluate different loan products
List of lenders on our website - do not have to use - use anyone you like
WELCOME PAM MULLEN!
WELLS FARGO HOME MORTGAGE
(House To Home Ownership or "H2O")
Original Loan Amount + 15% of Appreciation
Other People That Will Work For You
Q: I am going through a divorce, should I apply now?
A: The divorce or separation must be finalized so that we can calculate your assets and income based on court-ordered divisions.
Q: Can I bid more for a house that I really like?
A: Not with the Permanently Affordable program. The maximum resale price listed on our website is the highest offer that the seller is allowed to accept. If you are using H20 to purchase a market rate home you may bid within your pre-approved price range.
Q: Can a seller of a Homeworks home reject my offer?
A: Yes, for three reasons:
1) You offered less than the maximum selling price;
2)Your offer is contingent on the sale of a home that you currently own;
3) You did not submit your offer within the designated 24-hours after the lottery.
Capital Improvements and Updates
Eligible items include:
Energy efficiency improvements
Increasing habitable space
Cooling systems including: whole house fans, ceiling fans, whole house evaporative coolers
Flooring: replace carpet over 10 years old with hardwood or tile
Radon gas mitigation
Remodel of kitchen or bath on homes 20+ years
Must be pre-approved
$25,000 is the lifetime maximum amount
2510 Taft, Unit 211
Max selling price: $161,109
2 bed, 2 bath condo
$1,200 - est. monthly PITI+HOA
3128 Big Horn St.
Max sale price: $254,304
2 bed, 2.5 bath townhome
$1,808 - est. monthly PITI+HOA
979 Laramie Blvd, Unit E
Max. Sale Price: $172,898
3 bed, 1.5 bath condo
$1,390 - est. monthly PITI+HOA
3072 Carbondale Lane #D
Max. sale price: $182,100
2 bed, 2 bath condo
$1,551 - est. monthly PITI+HOA
3670 Paonia Street
4 bed, 3.5 bath
$2,579 - est. monthly PITI+HOA
Get applicants certified, let them know of any potential issues that could affect the sale
Run the lottery
Review sale contract to make sure it meets city requirements
Review inspection report and order necessary corrections based on covenant agreement
Work with lender and Title Company to prepare closing documents
HOA Management Company
County Clerk's Office