FAQs For Prospective SDCLT Homebuyers
Owning a SDCLT home is not for everyone. If you can afford to buy a market rate home that may be the best choice for you. However, if you are priced out of the expensive San Diego real estate market and want to enjoy most of the benefits of homeownership buying a SDCLT home may be the right thing for you. Below we address some of the common questions about owning a SDCLT home.
Why should I consider buying a San Diego Community Land Trust Home?
SDCLT homeownership provides the majority of the benefits of traditional homeownership: long-term security of homeownership, fixed housing costs, tax deductions and the potential for equity and wealth acumulation. While SDCLT homeownership limits the appreciation a homeowner may realize upon the sale of the home, this investment is still likely to provide a significant return relative to renting. In addition to the potential for appreciation, SDCLT homeowners will realize equity acumulation with every mortgage payment.
Why does SDCLT only sell the home and not the land?
This is how the SDCLT can ensure permanent affordability of the home for future generations of working families. By retaining ownership of the land underneath the homes SDCLT removes land appreciation from the overall cost.
Who is eligible to buy a home from SDCLT?
Applicants must meet the following criteria:
Head of household must be at least 18 years of age
The household must meet the income eligibility criteria for the particular unit (this will generally be from 80% to 120% of the San Diego County Area Median Income)
Pre-qualify for a 30 year fixed rate mortgage
Contribute at least 5% to the total purchase price, including closing costs (downpayment assistance programs may be available to help)
Complete a homeowner education course designated by the SDCLT that will include an overview of the rights and obligations of homeownership on SDCLT ground leased property.
Understand and agree to the provisions of the ground lease, including the resale restrictions that limit potential appreciation to the homeowner.
So, tell me more about this ground lease
SDCLT homeowers will enter into a 99 year ground lease that spells out the obligations of the SDCLT and the homeowner regarding maintainence and improvements by the homeowner, occupancy of the home, payment of the ground lease fee (initially $50.00 per month), real estate tax payment obligations and resale provisions governing subsequent sales of the home. The ground lease can be passed on to the homeowners heirs. The heirs, if qualified, may remain in the home by accepting all of the terms of the ground lease, or will be entitled to the acumulated equity in accordance with the resale provisions in the lease.
Can I obtain mortgage financing for a SDCLT home?
Yes, there are mortgage lenders that will issue mortgages on SDCLT properties. SDCLT and our partners will assist prospective SDCLT homeowners in obtaining a mortgage for the purchase of a SDCLT home.
What happens when I am ready to sell?
You must sell your home to a family in the same income qulifying category in place when you purchased your home. In addition, the sales price paid by the subsequent homeowner will be limited by the resale formula in the ground lease.
How does the resale formula in the ground lease work?
Upon a sale of your home the sales price will be limited by the percentage change in the San Diego County Area Median Income from the time you purchased the home. Below is an example:
Your purchase price: $200,000
Change in San Diego AMI from time of your purchase: 8%
Resale price to income-qualified purchaser: $216,000 (2000,000 x 1.08)
Your equity realized from resale: $16,000 (216,000 - 200,000)
OK, I have additional questions or I want to indicate my interest in becoming a SDCLT homeowner?
Use the Contact Us button below to get more information or to express you interest in becoming a SDCLT homeowner.