HIP is a buyer-driven program that provides additional buying power for buyers to affordably purchase a home of their choice. Once a buyer completes the necessary pre-purchase education and application steps, they then can be enrolled in the program. HIP aligns buyers with an affordability investment and a commitment for a post-purchase deferred maintenance and/or rehab investment. HIP allows the buyer to leverage their mortgage with the affordability investment to be able to buy a home that previously would have been out of reach.
After the homeowner purchases the home, Rondo CLT will work with the homeowner to develop a scope of work and hire contractors to address deferred maintenance and rehab items on the home.
- Homes must be in Ramsey County
- Homes must be single-family homes
- Households must have household income of less than 80% AMI at time of closing
- Households must work with a lender who has a CLT-friendly mortgage product approval
Ground Lease Agreement
Home buyers participating in the HIP program purchase only the house and enter into a long term agreement with the Rondo CLT to lease the land. The agreement gives the CLT homeowner the exclusive right to use the land as they would if they owned it. Because Rondo CLT owns the land and the homeowner owns the home, Rondo CLT and the homeowner sign a ground lease that defines the roles and responsibilities of both parties. The ground lease allows the homeowner secure, long-term rights to use the land. CLT homeowners have exclusive use of the land, and they have full responsibility for the property.
Rondo CLT charges $15/month as a lease fee to all CLT homeowners. The lease fee gives the homeowner full use of the land and support services from Rondo CLT. The ground lease is renewable, can be transferred to the homeowner’s heirs, and ensures full rights of privacy. The ground lease requires that the home be owner-occupied at least eight months out of the year. The ground lease also provides a resale formula that is used to determine the sale price, if and when the homeowner decides to sell their Rondo CLT home.
Assuming the house has retained or increased its value, a Rondo CLT homeowner who sells his or her home will get all of their equity (the amount of money that they used as a down-payment as well as the portion of the mortgage paid off) plus 25% of the appreciated value of the home.
The sale price for the house is determined using an independent appraisal of the value of the house and the resale formula outlined in the ground lease.
The following is an example of how the selling price for a CLT house would be determined:
- You purchase a home for $165,000
- You decide to sell your home and it is now worth $200,000 (assessed by an independent appraiser)
- Your home value increased by $35,000 ($200,000-$165,000). Your share of the increased value is 25% ($35,000 x.25= $8,750) or $8,750
- You agree to sell your home to another low to moderate-income family for $173,750
In this scenario, the seller receives the amount they paid off of their mortgage, their down- payment, plus $8,750 from appreciation.
The resale formula preserves the affordability for the next family who will buy the Rondo CLT house.
Essentially, by agreeing to the resale formula, a Rondo CLT home buyer is agreeing to help another limited income family purchase a house in the same way that they were helped in purchasing their house.
Rondo CLT’s programs are for families and individuals with limited incomes. Income limits vary by household size. The current limits are:
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If your total household income before taxes is below these limits, you can apply to Rondo CLT.