Community Home Trust

1. How do Home Trust homes stay affordable?

Our homes remain affordable because we limit appreciation that can be realized by our homeowners.  We are able to limit  appreciation because we retain the deed to all of our properties.  We convey an ownership interest in these properties using a 99-year ground lease, which is consistent with the community land trust (CLT) model.  Our objective is to keep our homes affordable to future home buyers who will need affordable housing options.

2. What is a community land trust?

A community land trust (CLT) is a nonprofit model that enables affordable housing to remain affordable virtually forever.  The premise of the model is to convey ownership using a 99-year ground lease, which intentionally limits appreciation.  There are more than 200 CLT’s throughout the United States, and four in North Carolina.

3. What is a ground lease?

The Ground Lease is the document that transfers the rights to buy, own, possess, and sell a Home Trust property while limiting the rights to alter, convey, and profit from that property.

4. How do I qualify for the Homeownership Program?

• We serve first time homebuyers that have not owned a home within the past three years. There may be special circumstances that would qualify you as a displaced homemaker (recently widowed or divorced, job loss)
• Our buyers currently live or work in Orange County (if County funds are involved, the residency period is one year minimum)
• The home must be used as the primary residence (not rent out as an investment)
• Total household income must not exceed the income limits for the program. Additional limitations for buyers receiving financial subsidy assistance.

5. What are the income limits for subsidy assistance and those for the program?

As of Dec. 2011

Family size	1 person	2 person	3 person	4 person
INCOME LIMIT (80 % of AMI)	$38,500	$44,000	$49,500	$54,950
*INCOME LIMIT (100% of AMI)	$48,125	$55,000	$61,875	$68,700

* These buyers would qualify for the program but not for subsidy assistance.

6. How much does it cost to buy and own a Home Trust home?

We strive to sell our homes at least 20% below market value. The sales price is not negotiable but we may be able to assist buyers with additional subsidy in some instances. Our goal is to remain affordable to our target buyers who earn less than 80% of median income.  We cannot reach every buyer with our program but we offer an excellent alternative to renting!

7. How do I qualify for subsidy assistance?

The Home Trust will provide assistance based on need as determined by a thorough review of income and employment documentation. There may be additional criteria, steps and documentation required dependent upon the source of funds. Our goal is to ensure that buyers are not over-extending themselves.  We will apply subsidy to reduce a buyer’s first mortgage amount such that the monthly costs are approximately 28% of the household’s monthly gross income. In any event we will not allow a buyer to purchase a home if the total monthly housing expenses exceed 30%.

8. How do I buy a Home Trust home?

You must meet the basic criteria of the homeownership program and attend classes and workshops to prepare you for homeownership. The classes are:

Home Trust Orientation—detailed overview of the homeownership program touching on some highlights of the process of buying, owning, and selling a Home Trust property.

Financial Counseling—one on one counseling session with a certified financial counselor to help you establish, review or revise your budget as well as acquiring, reviewing and repairing your credit report.

Homebuyer Education—an extensive 8 hour class that instructs first-time homebuyers in the process of buying and owning a home. This class must be taught by a certified housing counselor and you must attend at least 7 of the 8 hours to obtain your certificate, good for 12 months.

9. When do I go to see a lender?

Once you are certain that you meet the program guidelines and you have determined what property you wish to buy you should contact lenders to get a sense of your borrowing power. Alternatively you can reserve the property of interest and get an estimate of the subsidy assistance you might be offered.

10. Is there a down payment requirement?

Home Trust  buyers must pay a $1,000 deposit when they sign a contract. This money is considered investment and not part of the cost to close.   This is the only down payment requirement.  However, closing costs may amount to an additional $4,000.  Buyers must be prepared to provide these funds at closing.  Larger down payments are permissible, and necessary if your housing ratio exceeds 30%.

11. Can I get gift money or have a co-signer?

Gifts are allowed up to $10,000. While we do allow for co-signers if the applicant is employed full-time many banks and some of our subsidy providers do not allow them or will have certain restrictions.

12. What type of credit score do I need to have?

Banks want to see a score in the 700s but no lower than 650. This may vary depending on the bank and the loan product. If you have not recently reviewed your credit report you can and should do so by visiting www.annualcreditreport.com . This site allows you to secure any or all three of your reports once within a 12 month period. We recommend that you do this prior to visiting the bank so that you are aware of what’s on your report.

13. What other fees do I pay to the Home Trust as part of my cost of home ownership?

You pay two monthly fees to the Home Trust for the entire time you own your home.  The first is a ground lease, or use fee, which is a small monthly charge that is payable to the Home Trust.  The second is the Stewardship Fee, which is explained below. You might see these two charges combined into one deduction from your  bank account on an automatic draft.

The Stewardship Fee is dedicated to replacing specific capital systems (or major components of those systems) such as: the roof, siding, air conditioning/heating system (HVAC), hot water heater, and flooring. For our single family homes,  the fee also covers  an annual termite inspection and warranty. These funds stay with the property and are only used to cover the replacement of those “big ticket” items listed above.  The fee varies for different homes, so please ask our Sales Team about the fee on the home you are interested in.

14. How does Home Trust homeownership differ from private market homeownership?

There are two key differences that every prospective buyer must understand:  Home Trust homeowners must reside in their homes and they cannot sell their homes to anyone at any price.   However, like private market owners, Home Trust homeowners have the security and tax advantages of ownership along with the financial obligations of the property including but not limited to: the mortgage, homeowner’s insurance, homeowner’s association dues and annual property taxes.  Our homeowners are also responsible for maintaining their homes and addressing repair needs (e.g. servicing the HVAC system, changing the air filters monthly, fixing leaks, etc).

15. How long does the ownership period last?

The Ground Lease transfers ownership rights for a 99 year period with an automatic renewal period of another 99 years. In addition there is a legacy provision which allows the home to be transferred to a spouse or children. While there is no minimum ownership period it is recommended to retain ownership for at least three years before considering reselling.

16. Can I make changes to the property?

Minor changes that do not affect the structural integrity of the home are a homeowner’s right. Alterations that do affect the structural integrity or require a permit must be pre-approved. Note that Home Trust owners do not receive compensation on improvements as this could impact affordability.

17. Can I work with any lender?

Buyers must work with one of the approved Home Trust lenders. These are reputable institutions who have agreed to hold your loan in house.

18. Can I work with any attorney?

We have a growing list of approved attorneys from which buyers may choose. These attorneys are well versed in the processes of the Home Trust’s program and offer all of our buyers a discount on their service at closing in addition to a pro-bono meeting to review the Ground Lease and any property covenants. Because this meeting is free of charge it is important to continue with that attorney for your closing.

19. Do I need a realtor?

The Home Trust Sales Department is a team of licensed real estate agents who represent the Home Trust but will provide their professional assistance through the home buying process. Buyers may have their own representation but the cost of that commission is upon the buyer, unless otherwise stated in writing. As with the buyer, the Home Trust Sales Team will assist the seller, but represents the interests of the Home Trust. Sellers may have their own representation but the process and guidelines for reselling a Home Trust home remain the same.

20. Do I need a home inspector?

We strongly recommend that every buyer obtain a home inspection report from an independent inspector.  Many times the Home Trust will commission an inspection of a property and we will always be willing to share that inspection report with a prospective buyer.

21. What if I’m not ready to buy a home now?

If you are not quite ready, willing, and able to purchase a home, we will provide feedback on what you need to accomplish in order to become a homeowner.

22. Can I rent my Home Trust home?

We only offer homeownership through this program. There have been instances in which a homeowner has had to leave for an extended period of time but has returned to the home as their primary residence. This is only allowable with prior discussion and approval from Community Home Trust.

23. Can I have roommates?

While roommates are discouraged, they are allowed. The ability to obtain the home and pay the monthly costs cannot be dependent on having a roommate.

24. What happens when I am ready to sell my Home Trust home?

A resale packet can be provided to you by the Sales Team or you can download the documents off the website. Once you have reviewed the documents you will know the appropriate steps in starting the process. It is important to remember that the process will take more time than selling a private market home. You should allow 90 days or more to sell your home.