BRUHA said:
... I had two major concerns: (1) I made more than they allow for eligibility and (2) you had to repay a portion of the grant if you didn't stay in the purchased property for atleast 5 years.
Has anyone had experience with programs that do not have minimum residency requirements?
I represent 3 such programs and I drafted the regulations for each. If you make more than the local amount for eligibility, theres not much I can help you with but to suggest, if you are really interested in using these kinds of programs, to consider adding a dependent or two, if you know what I mean. The income eligibility scale slides based on family size.
The 5 year requirement is a no brainer. If you are buying a house to live in yourself, in all probability you will live in the property for at least 5 years, if you do not, the amount of downpayment assistance that you might have to repay should be in the equity -- that is, if you purchase the property at fair market value(FMV) or less (hopefully less), and you decide to sell within the five years at FMV you would have recouped most if not all of the downpayment assistance. The reason for the payback provision is so that within 5 years you do not off the property and receive a windfall profit. So, you have to payback the windfall (the downpayment assistance). Note also, that most programs provide that a fraction of the downpayment assistance is forgiven for <u>each month</u>, pro-rata, at 1/60th for each month that you maintain the property as your principal residence. Therefore, if you only maintain the property as your principal residence for say 3 years (36 months), you will only have to pay back 24 months of the assistance given to you because you would have earned 36 months -- or, said another way, 36 months would have been forgiven.
The following is an excerpt from one of the programs I designed. Is it similar to what you are talking about ???:
1. <u>PAYMENT OF PROMISSORY NOTE</u>.
One sixtieth (1/60th of the original principal sum hereunder shall be forgiven for each full month that Homeowner retains ownership of and occupies the subject property during the first five years after the date hereof. If the Homeowner retains ownership and occupy the property for five (5) years, the entire amount of the note will be forgiven.
3. <u>RESALE OR REFINANCE BY HOMEOWNER</u>.
The Homeowner may transfer the Homeowner’s ownership interest in the Purchased Home, subject only to the County’s prior right to purchase; the purchaser's execution of a promissory note, if the County so requires; and the limitation on the amount of sales proceeds a family may retain upon sale within the first five (5) years of ownership. Provided, however, that:
a. It is understood and agreed by the Homeowner that the intent of the Down Payment Assistance Program is to assist a moderate to low income home buyer with the purchase of a safe, decent and sanitary home; that the purpose of this silent second mortgage is to reduce the cost of such home so as to make it more affordable; that as a direct result of this mortgage the buyer/mortgagor, through compliance with this mortgage and the provisions of the Down Payment Assistance Program, will acquire equity in the property during the time in which no payment, principal or interest, is made upon the outstanding balance under this mortgage; and that the County is under a duty to preclude the realization of a windfall profit by the initial purchaser(s) in the event of a resale of the mortgage property or the refinancing of this mortgage by the initial purchasers.
b. It is further understood and agreed that, in order to prevent a windfall profit to the initial purchaser/mortgagor in the event of a resale or a refinancing of this mortgage before the end of five (5) years, in addition to all other provisions of this mortgage, the promissory note and the provisions of the Down Payment Assistance Program, the terms of which are incorporated herein and made a part hereof by reference thereto, the County shall recover interest on the balance of the sums secured hereby, as follows:
If the outstanding principal amount is refinanced or the property is sold during year one (1) through year five (5), mortgagor shall include in the principal amount due and owing to the County interest at the rate of six (6) % percent, calculated from the commencement of this mortgage through the date that said principal is refinanced, in the case of a refinancing, or the date the principal is paid in full, in the case of a resale.
Hope this helped. If you have more questions, I'll do my best.
QueEx
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