New First Time Home-Buyer Program: Costa Mesa, CA

First off:
To be eligible for aid, you must attend one of two information sessions.
1) Thursday, November 3 @ 11am Costa Mesa City Hall, Council Chambers

-OR-

2) Monday, November 7 @ 6:30pm Costa Mesa City Hall, Council Chambers

The Costa Mesa City Hall Council Chambers are located at 77 Fair Drive. (Link takes you to Mapquest.)

We attended the lender training for Costa Mesa's first time home-buyer program on Friday. A fascinating program, it opens up a lot of opportunities to new buyers. The funding is limited this year, but this is also the first year they have had a program offering this much aid. They are offering up to $240,000 in assistance on home purchases up to $655,000 through a 0% interest 45 year silent second loan/equity share.

Program Information is located here.

Not everyone will be able to qualify, but the program is a huge boon to those who will qualify. I encourage anyone who is remotely curious to please attend the information sessions.

Some key things to keep in mind:

A silent second. This is a loan that you do not have to make payments on until a specific date, or until you disturb your first loan by refinancing or paying it off. Some programs offer zero or limited interest until the second is paid off. These sorts of programs are typically government aid programs that allow new buyers to qualify for a higher purchase price. (because the monthly payment required is greatly reduced)

Equity Share. In a typical loan, the bank owns a specific dollar amount of the home until it is paid off. In an equity share, the bank owns a percentage of your home. Example: You buy a home for $500,000, using $200,000 in city aid. If you sell your home before the end of the term, in addition to paying back the city the $200,000, you must pay them their percentage of the growth in value.

So, $200,000 on a $500,000 home purchase is 40%. Let's say the home doubles in value to $1,000,000. When you sell the home, you owe the city their 40%, not just $200,000. Thus you'll pay them $400,000. The benefit to the city is that it encourages people to stay and build their lives in the city. Or, if you sell early, the extra funds help to provide assistance to new buyers.

Feel free to email us your questions, or post them in the comments. If we can't answer your question, we'll direct you to the best source for more information.