|Affordable Cohousing: Sections 4 - 6||<– Date –> <– Thread –>|
|From: Chris ScottHanson (cscotthansonmac.com)|
|Date: Wed, 25 Feb 2015 09:43:00 -0800 (PST)|
A SELECTION OF IDEAS FOR CREATING MORE AFFORDABILITY IN YOUR COMMUNITY [submitted to cohousing-l in weekly installments, for comment and input.] The strategies outlined in the series to follow have been collected over the past 20 years of doing cohousing projects across the US and Canada. Many of the strategies outlined below are what I call Internal Banking. These “internal banking” relationships are magical when they happen, and it would seem they can only happen when there is a strong sense of community, and trust. _____________________________________ 4. Co-purchase Options For most cohousing groups, there are buyers who find that it is feasible and more affordable for them to co-purchase their new home with another person or another household. Having common facilities and a strong sense of community is often what makes this possible. Sometimes the other party is another home owner within the community, and sometimes they are external friends or family. And sometimes the co-purchasers will occupy the new home together - sometimes called “tenants in common.” In either case, the ownership is shared, the proceeds of the sale of the home is also shared if and when it is resold. 5. First Time Buyers There are first time buyer mortgage programs that could help those who qualify by either reducing the down payment requirements, or possibly even eliminating the requirement for a down payment. If you think you may qualify, please ask for more information about these programs. Qualification will always be based on making a commitment to being a part of the community. 6. The Reduced Monthly Condo Fee Subsidy. Adopted by some cohousing communities, the idea here is that banks will grant mortgages based on the following formula: your total housing costs = mortgage+ taxes+ insurance+ monthly condominium fees may not exceed x% of your gross annual income. If the condominium fees are removed or reduced, the bank can give the home buyer a slightly higher mortgage. Over the years, the total mortgage costs will remain the same, but because of inflation costs, the home-owner's income will usually rise, so that gradually, the homeowner can afford to pay the condominium fees. The removal of $150 in condo fees will allow the buyer to qualify for something like $20-30K more mortgage, often enough to allow a young family to buy that extra bedroom they need. If structured correctly, the cost to each of the non-subsidized households is only a few dollars each month in the initial year and may be reduced to zero in 5 to 10 years. Members may apply for a temporary removal of the monthly Coho (or Condominium) fees in order to qualify for a higher mortgage. Starting from the initial granting of the subsidy, the Coho fees will gradually rise, e.g.: a) in 5 annual steps of 1/5 of the regular fees. After 5 years the member pays regular dues, or… b) in accordance with member's ability to pay, if member provides the Dearborn Commons Coho Business Association with income documentation. _____________________________________ Chris ScottHanson (206) 601-7802 The list of 13 strategies: 1. Internal Down Payment Assistance 2. Outside Down Payment Assistance 3. Second Mortgages 4. Co-purchase Options 5. First Time Buyers 6. The Reduced Monthly Condo Fee Subsidy. 7. Maintenance Reserve Reinvestment 8. Unit Price Buy Down 9. Design for Affordability - Capital Costs and Operating Costs 10. Shared Units 11. Community Owned Rental Unit 12. Participating Nonresident Owners 13. Purchase of One or More Units by an Outside Affordable Housing Entity
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