FAQ

What does Homestead do?

• Homestead is a first-time homeownership program dedicated to expanding opportunity, strengthening community, and investing in the future by providing permanently affordable homes in Seattle and King County.
•  Homestead offers homes at below market rate to make homeownership possible for moderate- and low-income individuals amd families.

How is Homestead different from other affordable homeownership programs?

• The homes supported by Homestead are permanently affordable, for the first buyer and future buyers as well.
• The ownership of land and housing is divided between Homestead and the homeowner.
• Homestead is an open-membership organization, anyone can join.  Members elect Homestead’s governing board.  Homestead homeowners are automatically members.

What is different about homeownership through Homestead? Would I truly own my home?

• Homeowners who purchase through Homestead own their homes, and get to enjoy all the security, control, tax advantages, and equity building opportunities of homeownership.
• Unlike traditional homeownership, Homestead homeowners lease the land under their homes from for a small monthly fee.
• If a homeowner chooses to sell, Homestead’s resale formula ensures the home is affordable for the next buyer.
• Homes must be owner-occupied, although owners are free to bring in additional roommates. Homeowners simply cannot rent out their whole house or abandon their home.

What are the benefits of homeownership with Homestead?

• Purchasing a home with Homestead helps buyers increase their purchasing power and ultimately secure a stable, affordable monthly mortgage payment.
• Homeowners enjoy stable, predictable appreciation and are more insulated from market declines than with traditional homeownership.
• Homestead partners with homeowners to ensure their ongoing homeownership success – even in this difficult economy, none of the Homestead homeowners have experienced foreclosure.
• The whole community benefits from a Homestead home purchase, making homeowners an important part of the solution to the housing crisis in Seattle and King County.
• Homestead’s democratic open-membership structure holds us accountable to the community.

How much equity can I build through land trust homeownership?

• Homeowners build equity on their homes in two ways – their homes appreciate in value and their mortgage balances decrease. Together, these two methods enable homeowners to build a significant amount of equity throughout their period of homeownership.
• The Homestead home appreciation rate is 1.5% interest compounded annually, for every year an owner owns the home.
• In addition, homeowners can receive capital improvement credits to their resale formula price for making property improvements.

A Homestead homowners resale price starts with their investment in the home (mortgage + downpayment – certain closing costs) and grows by 1.5% annually.  For example the resale price of a home where the buyer paid $200,000 to buy is as follows:

After 1 year.......... $203,000       After 25 years............ $290,189

After 5 years......... $215,456       After 30 years............ $312,616

After 10 years...... $232,108       After 35 years............ $336,776

After 15 years...... $250,046       After 40 years............ $362,803

After 20 year........ $269,371