EXAMPLE OF SHARED APPRECIATION MORTGAGE

                                                   Assumptions

Family Income                                                                                           $30,000

Family Size                                                                                             4 persons

Property                                                                                              2 bedrooms

Price                                                                                                        $150,000

 

Calculation of Affordable Mortgage

Family's monthly income                                                                            $2,500

Affordable housing cost (based on 33% of family income)                        $825*

Affordable payment                                                                                        $545

Maximum mortgage, based on an 8% interest rate and

a 30 year amortization                                                                               $74,275

*The difference between housing cost and housing payment includes taxes

  and homeowner association fees to be paid by the buyer.

 

                                     Sources of Funds for Purchase

Down payment (3%)                                                                                    $4,500

Conventional loan (1st Trust Deed)                                                          $74,275

City Shared Appreciation Loan (2nd Trust Deed)                                   $71,225

TOTAL FUNDS                                                                                       $150,000

                                                                              

                                         City Share of Appreciation

Resale Price                                                                                           $200,000

Minus:         Eligible Selling Costs                                                            $15,000

Minus:         Approved Capital Improvements                                                     0

Minus:         Original Purchase Price                                                      $150,000

Equals:       Total Appreciation                                                                 $35,000

 

TORCA Loan Amount                                                                              $71,225

TORCA Loan/Original Purchase Price                                                          47.5%

"CONTINGENT INTEREST" due to City                                                $16,625

Principal of TORCA Loan due to City                                                     $71,225

TOTAL AMOUNT DUE TO CITY ON SALE                                          $87,850

 

NET APPRECIATION TO BORROWER ON SALE                             $18,375