LEGAL NEWS
Let’s talk about shared equity:
PHOTO FROM NYTIMES.COM
How California Legislators want to help Californians buy houses with the down payment Raising the down payment needed to get a mortgage can prove difficult for would-be homeowners. Though there are numerous state-run down payment assistant programs, they are not accessible to all. And that is why California legislators want to help you raise your down payment.
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he state’s legislators are proposing the creation of a billion-dollar fund that will help first-time homebuyers raise the down payment in its entirety or an amount close to that. It’ll achieve this through shared equity.
equity makes it so that the lenders are the ones that enjoy any tax advantages and any mortgage rate deductions. Programs such as these prove especially helpful in high-cost real estate markets.
WHAT IS SHARED EQUITY Investopedia defines a shared equity mortgage as a contract that divides property ownership between a lender and borrower. The borrower must use the property used by the borrower. Each part gets a portion of the equity when the property is sold based on their equity contribution. Any losses incurred from the property are likewise split equally between the parties.
HOW WILL THIS SHARED EQUITY WORK? The million-dollar fund will raise money by issuing a billion-dollar revenue bond for ten years. The budget for this initiative includes $50 million and $150 million for this year and the next to cover administrative costs and revenue bond interest payments.
Offered by different lenders in the U.S., shared 124 | AUGUST 2022
Under this program, the Californian government aims to help at least 7,700 borrowers annually. The program, if approved, would start issuing interest-free second mortgage loans for up to
