Understanding How Your Home's Value Impacts Your Repayment
When you use the California Dream For All Shared Appreciation Loan to purchase your home, you agree to share a portion of your home's appreciation with the program when you sell, refinance, or pay off your loan. Understanding how this shared appreciation is calculated is essential for planning your long-term homeownership strategy.
Determining the Appreciation of Your Home
The first step in calculating your shared appreciation is to determine how much your home's value has increased since you purchased it. This is done by subtracting the original purchase price (or the original appraisal value, whichever is less) from the new value of your home at the time of sale, refinance, or payoff.
For example, if you purchased your home for $500,000 and its value has increased to $700,000 at the time of sale, your home's appreciation would be $200,000.
Calculating Your Shared Appreciation Percentage
The percentage of appreciation you'll share with the Dream For All program depends on your Area Median Income (AMI) at the time of purchase:
- If your income is less than or equal to 80% of the AMI, you'll share 15% of your home's appreciation.
- If your income is above 80% of the AMI but within the CalHFA income limits, you'll share 20% of your home's appreciation.
To determine your shared appreciation amount, multiply your home's appreciation by the applicable percentage (15% or 20%).
Maximum Shared Appreciation Cap
It's important to note that the shared appreciation amount is capped at 2.5 times the original Dream For All loan amount. This means that even if your home experiences significant appreciation, you won't be required to pay more than 2.5 times the amount you initially borrowed.
Partnering with Tennant Lending for Clear Guidance
Navigating the shared appreciation calculation can be complex, but Tennant Lending is here to help. Our experienced mortgage professionals will work with you to ensure that you fully understand how the shared appreciation is determined and what it means for your long-term homeownership plans.
We'll help you identify your AMI and the corresponding shared appreciation percentage, as well as provide guidance on the maximum shared appreciation cap. By partnering with Tennant Lending, you can feel confident in your understanding of the Dream For All program and make informed decisions about your home purchase.
Let Tennant Lending Help You Achieve Your Homeownership Dreams
At Tennant Lending, we're committed to helping you achieve your homeownership goals through the California Dream For All Shared Appreciation Loan program. Our knowledgeable team will guide you through the process, ensuring that you have a clear understanding of how the shared appreciation is calculated and what it means for your future.
Don't let uncertainty about shared appreciation keep you from pursuing your dream of homeownership. Contact Tennant Lending today to learn more about how we can help you navigate the California Dream For All program and take the first step toward owning your own home.
The link has been copied!
