Ken and Vern, a young couple with $40,000 in annual household income, could only afford a $6,500 downpayment on a home. They bought a one-bedroom unit for $130,000 from HOA’s Shermount development in 2003. HOA provided $15,000 in downpayment help to bring the monthly carrying cost to $1,000, an amount less than the couple’s previous rent.
Ken and Vern sold their condo for $200,000 at the end of 2007. They paid back HOA’s $15,000 second mortgage principle and $7,000 in interest. By the time they sold their home, their first mortgage had been reduced to $98,000. This meant that just four and a half years after Ken and Vern put down $6,500 on their first home, they built up a total of $80,000 in equity.
The increase in net worth offered the couple numerous options. They could now afford to put down a larger downpayment on a larger home in anticipation of children. They could invest some of the money. HOA does not know what Ken and Vern did with their newfound family equity but is happy to have helped a moderate income family own a home and create potential for a better future.
HOA would have been content to help this young couple become homeowners even if their home did not significantly increase in value. Helping them convert their rent payments into mortgage payments is ample reward.
