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What
is HIP?
The CLCLT Homebuyer Initiated Program (HIP) is for
homebuyers who are mortgage approved, but lacking the sufficient funds to purchase
a home in the rapidly escalating housing markets of Minneapolis. The Homebuyer
Initiated Program (HIP) lowers the cost of housing by separating ownership
of the house from ownership of the land on which the house sits.
Similar to
a second mortgage, the CLCLT fills the financial gap between an affordable
mortgage and the cost of home for households looking to purchase a home in
Minneapolis. The major difference is that when the homeowner decides to sell,
the home will be affordable to another buyer through the Community Land Trust.
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Who will be served by HIP?
HIP is available to households earning less than 80% MMI; though preference will
be given to households earning less than 50% MMI. To qualify for HIP, households
must complete homebuyer education workshop, attend a CLT orientation, secure
mortgage financing from a CLT-approved lender, and complete a CLCLT application.
What are the benefits of
HIP?
• HIP puts homeownership within
the reach of low-to-moderate income homebuyers
• HIP gives homebuyers the opportunity to purchase homes available on the
open real estate market
• HIP buyers are able to choose the homes and neighborhoods that meet their
needs
• Free home inspection for homes purchased through program
• HIP Rehab is coordinated and overseen by the CLCLT’s rehab advisor
• HIP Rehab addresses any deferred maintenance on the home at the time
of purchase
• HIP helps households earn equity through homeownership that is not available
in the rental market
• HIP homes will be affordable to future CLT homebuyers
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How does HIP work?
HIP will consist of two grants: an affordability investment grant and
a rehab grant.
Affordability Grant.
The Affordability Investment Grant is intended to give a household more
purchasing power and essentially reducing the mortgage amount for a prospective
household looking to buy a home in the Minneapolis housing market. Based
on current housing costs in Minneapolis, the CLCLT
is proposing affordability grants in the following amounts: $25,000 for
households earning less than 80% MMI, $40,000 for households earning
less than 60% MMI, and $65,000 for households earning less than 50% MMI.
Rehab Grant
The rehab grant will be used to address any mechanical, structural, and
safety issues that a home has at the time of purchase. The rehab grant
helps ensure that an expensive repair will not jeopardize the financial
stability of the new homeowner in the first few years of homeownership.
Examples of the eligible rehab include roof replacement, plumbing and
electrical updates, lead abatement, storm window and door replacement,
siding repair, etc. Rehab Grant amounts will be determined by assigning
a rehab consultant to walk through the property to determine that the
estimated cost of any necessary rehab is not expected to exceed $25,000.
The necessary rehab work will be detailed, documented and initiated immediately
after buyer closing with the funds escrowed with the appropriate lender.
The rehab consultant will then contract out the work, approve escrow
payments under supervision of the CLCLT, and give final approval to all
necessary rehab.
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