Learn How to Buy a Trust Home

Learn How to Buy a Trust Home

Making Homeownership Attainable

Homeownership may be more attainable than you think, and the Lehigh Valley Community Land Trust could make it a reality for you! The Trust keeps a lifetime commitment to its homeowners and to neighborhoods with Trust homes.

Find out how the Trust could make you a homeowner!

What is a Trust home?

Do I qualify to buy a Trust home?

Is Trust homeownership for you?

How much money do you need upfront?

What’s different about Trust homeownership?

What are the steps to purchasing a Trust home?

Frequently Asked Questions

What is a Trust home?

A Trust home is a home that remains attainable generation after generation. When you purchase a Trust Home, you get an unbeatable bargain and a beautiful, well-maintained home. When you sell a Trust Home, you recoup what you’ve invested and claim a portion of the home’s increased value. Since your home is a Trust Home, you agree to keep it attainable for the next homeowner. You get a fair deal and another family gets to fulfill their dream of homeownership.

 

How do I own a Trust Home?

Ownership of a Trust Home is provided to you once you acquire a mortgage from a bank and enter into a 99-year lease agreement with the Lehigh Valley Community Land Trust. As the homeowner, you purchase the physical home itself. The Trust keeps title to the land under the home, but the 99-year lease provides you exclusive rights to use the land. This gives you the security of conventional homeownership, the extra support of the Trust, and keeps the home affordable for the next prospective homebuyer. The purchase of a Trust home works like a standard real estate purchase.

What makes a Trust Home so affordable?

In a normal home purchase, you pay for both the cost of the home and the land. In a Trust home purchase, you only buy the home. This discount is passed on from generation to generation.

Why is the land preserved in the Lehigh Valley Community Land Trust?

Everyone gets a lower purchase price—not just this generation of homebuyers. A community land trust is the best way to preserve affordable homeownership opportunities for future generations. The Trust is bound by its mission and its bylaws to keep homeownership affordable. This ensures that future generations receive the same kind of opportunities that you receive whenever you purchased your Trust Home.

Can my family inherit the home?

Absolutely. Anyone that has lived in your home for at least a year and/or your children can inherit the home. Other people can also inherit the home. If they aren’t income-eligible, they can sell the home in the same way that you can sell the home.

How do I know the Trust is acting in the interest of homeowners?

Homeowners are invited and encouraged to join the Trust’s Board of Directors. The ground lease also restricts the Trust from doing things that may not be in the interests of homeowners.

Eligibility

All of our homes are eligible to households with incomes up to 80% of the Area Median Income. On rare occasions, a higher income limit may be in effect. You can get this information from the real estate listing. As a general rule, if your household income falls below the limits in the below table, you can purchase a Trust home.

To begin the income eligibility review, please email or fax us a completed pre-application along with the documents listed below. This documentation should be sent to us right around the time you make an offer with your Realtor. If you give it to your Realtor, they can also send it to us with your offer.

In additon to income guidelines, buyers must have a financial situation (income, savings, debts, and credit) suitable to obtain a mortgage to purchase the home from a lender. All buyers must be U.S. citizens or legal residents 18 years of age or older.

All buyers must complete eight hours of HUD-approved homeownership counseling prior to purchase. This can be completed free of charge through out sister agency, Community Action Financial Services. Buyers will also receive two hours of education with LVCLT staff.

 

If you or your Realtor have any questions about these guidelines or your eligibility, we strongly encourage you to call us at (484) 893-1061.

LVCLT Income Guidelines 2019

DISCLAIMER: The content on this page is being provided for informational purposes only. None of the information shall be meant as a determination of income eligibility or acceptance of a purchase offer. LVCLT shall not be held liable for errors, omissions, or changes to this page. For any questions or to discuss your situation, please contact us.

 

We encourage and support a marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, handicap, familial status, or national origin.

Is Trust Homeownership for You?

Our homeownership program is open to any and all buyers who are income-qualified and want to live in Lehigh County or Northampton County. When thinking about your eligibility, you should consider your income and employment, as well as your credit history and savings. These are the factors a lender will consider when you apply for a mortgage. We recognize that homebuyers may be at different stages of the homebuyer process. We can help connect you to other community resources to assist you.
Are you ready to buy a home?
If you want to buy a Trust Home, you need to review your current income, monthly debt payments, credit report and savings. A homeownership counselor can help you identify how much you can afford and your eligibility. These services are available through our sister program Community Action Financial Services. Although everyone’s financial situations are unique, we do not allow our homebuyers to pay more than 33% of their gross monthly income towards housing costs (including the monthly ground lease fee).
What does your income need to be in order to qualify for Trust homeownership?
The Trust may serve households with steady incomes of up to 80% of the area median income.  Occasionally, we might offer a home with a different income limit.  This information will be noted in the real estate listing if applicable.
What if your debts are high?
Almost everyone has some debt. Paying consistently on debt is what builds your credit history. However, most lenders want consumer debt load (the minimum monthly payments on credit cards, your car loan payment, student loan payment, any child support or alimony that you pay) to be no more than 10% of your gross monthly income. The more debt you carry, the smaller the home mortgage loan you will be able to qualify for. Your homeownership counselor will help provide you with tools and create a plan to reduce your debt and stick to a sustainable budget.
What if you have credit problems?
As with purchasing a market rate house, a participating lender will perform a thorough credit history check before approving your mortgage. “Credit repair” is really a matter of debt repayment and time—it takes time (sometimes several months) for credit reporting agencies to clear debts on your credit report, even if you’ve paid the debts off. If you have credit problems, it doesn’t mean homeownership is out of reach—it just means you have some financial work to do and likely won’t be able to purchase a home right away.

How Much Will I Need to Buy a Trust Home?

The Trust suggests that buyers have at least $2,000 to $4,000 in savings for home purchase. In some cases, your lender’s mortgage product may allow you to purchase your home with as little as 3% of the purchase price down. Closing costs (including title insurance and loan fees) can range from 3 to 6% of the loan depending on the loan product you choose. Your lender, your Realtor, and Trust staff may be able to give you information about down payment and closing cost assistance programs that might reduce the amount of money you need out-of-pocket. Gifts from family or friends may be eligible to help homebuyers with closing costs and down payments.

After you’ve closed on the purchase of your house, we recommend that you still have at least $1,000 in your bank account Remember: once you’re the homeowner, it’s your responsibility to make repairs. Don’t be caught off-guard by an unexpected repair!
Plan to put away at least $25- $50 a month in a savings account dedicated for future repairs. Even if your house is new today, it will need repairs or updates over time.

What is Shared-Equity Homeownership?

The Trust uses a shared-equity homeownership model.  Trust Homes are sold for below market-rate prices because grants or donations are used to bring down the price.  In return for a reduced price on a home, Trust Homebuyers agree to limit the resale price of their home for future buyers.   On top of saving money now, Trust Homebuyers also get to recoup what they invest and realize a share of the home’s increased value.  However, what makes a Trust Homeowner unique is the fact that they make sure to pass on a fair deal to the next buyer. 
How does this work?  Because the Trust holds the land in trust, a 99-year ground lease provides ownership of the home and exclusive rights to the land to the Trust Homeowner.  Within this ground lease is a resale formula.  When a Trust Homeowner decides to sell their home, they use this resale formula to figure out the price for the next buyer. This is what makes the Trust a community land trust – every Trust Homeowner agrees to pass the benefit of affordability on to the next homeowner. This is how the property remains affordable to future generations of homebuyers in the community.
For some, Trust Homes are the first step to homeownership. Later they may want to move on to market-rate homes.  For others, Trust Homes–and the community support that they bring–are the preferred way to own a home.

The Steps to Owning a Trust Home…

    Tour a Trust Home.

You can request a showing of any of our homes through our listing agent (indicated on the listing) or a Realtor of your choice.

    Obtain a pre-qualification letter from a mortgage lender.

You’ll have a conversation with a lender, and this letter will give you an idea of how much home you can afford.  Be prepared to talk about your income, expenses, and debts.  Your Realtor can help you through this process.  This is the first step to getting your mortgage to purchase the home, and you’ll need it to make an offer.  You can work with any lender of your choice.  Some lenders are familiar with us, and may be able to help you access first-time homebuyer grants that could help lower your down payment and closing costs.  You or your Realtor can contact us for this info.

Submit an offer to purchase the home.

Your Realtor will work with you to put together an offer, and will then present it to our Realtor.  Your offer should include a competed LVCLT pre-application and your pre-qualification letter.  You’ll negotiate with LVCLT as you would with any other seller.  These negotiations will lead to a signed Agreement of Sale.  We’ll also work on your income certification during this time.

   Work with us, your Realtor, and your lender to move toward closing.

You’ll officially submit your mortgage application.  Once the bank determines that your financial situation is suitable, they’ll give you what is known as a “conditional commitment” letter.  This letter will indicate steps that, if you complete, you’ll be able to obtain your mortgage.  Your Realtor and LVCLT staff will work with you as needed.

  Learn more about homeownership and LVCLT.

As yopu work to move toward closing, you can complete your First Time Home Buyer seminars.  They can be scheduled free of charge through our sister program Community Action Financial Services.  You’ll also meet with LVCLT staff to learn more about Trust homeownership.

 Close on the home and become a homeowner!

Once you’ve finished all steps to obtain your mortgage and completed all informational sessions, the bank will give you what is known as a “clear to close.”  This means you’re all ready to purchase the home!  A specific closing date, time, and place will be set for you to sign paperwork, get the keys, and officially become a homeowner!
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