Commonly Asked Questions

This information is provided as a general resource and it not intended to fully describe or disclose all requirements or restrictions of the HomeBase affordable homes program. Program rules are subject to change.

What is the HomeBase Affordable Homes Program?
HomeBase will administer and manage the Affordable Homes Program for the Westgate Grove Development in order to achieve long-term affordability. HomeBase will serve as the compliance agent to ensure income eligible families occupy the units. HomeBase will also manage resales to ensure another income eligible family is able to purchase these units. We are committed to providing long-term affordable homeownership through a Shared Appreciation Loan Program.
Where is Westgate Grove located?
Westgate Grove is located off Westgate Boulevard near Cameron Loop.
How many affordable homes are being built at Westgate Grove?

In Phase I, there were 61 affordable homes built at Westgate Grove. The first for-sale residential phase included single-family detached condominiums that were affordable to eligible families and individuals. Phase II of Westgate Grove will also include 88 affordable attached for-sale condominium units affordable to eligible families and individuals.

Who is eligible for an affordable home at Westgate?

Families or individuals earning 80% or less of Austin Median Family Income (MFI) are eligible to apply to purchase a home. Please see the Income Eligibility Instructions for additional qualification requirements for purchasing an affordable home at Westgate. Applicants must also qualify for a mortgage loan with an approved lender. This means clients must have a documented income history.

What is Median Family Income?

Median Family Income (MFI) is a leading economic calculation commonly used as a benchmark in affordable homes programs. MFI is an annual gross income figure. The U.S. Department for Housing and Urban Development (HUD) determines the median family income for the Austin area annually.

So what does 80 percent MFI mean in dollar terms?

The current MFI for Austin and Travis County is $81,400 for a family of four. That means that 80 percent of MFI — the threshold for a HomeBase Affordable home — is $65,100 for a family of four, or $45,600 for a single person. HomeBase will modify income requirements, based on HUD’s annual published MFI limits for the area.

What if I make substantially less than 80 percent MFI? Will I ever be able to afford to live at Westgate?

HomeBase has committed to pursue strategies that could allow for deeper affordability at Westgate — making for-sale housing available for families earning incomes below the 80% MFI benchmarks. Several options are being considered that could result in housing being available to meet this goal at Westgate in the future.

What happens if income increases after the homeowner moves into his or her affordable home?
Purchasers of affordable homes do not need to have their income recertified in the future after purchasing their home. HomeBase verifies income prior to contract signing.
How does someone qualify for an affordable home at Westgate?

As part of the registration process, prospective buyers in the HomeBase Affordable Homes Program go through an income and asset certification process to verify their eligibility to purchase an affordable home at Westgate. Prospective buyers must also qualify for a home mortgage through one of our participating lenders.

Who is involved contractually in a home purchase at Westgate Grove?

Homebuyers who have made the decision to buy a specific home at Westgate Grove, and have qualified for the program and for a primary mortgage, will sign a sales contract with the homebuilder specifying the terms and conditions of the sale. Included in the purchase process, they will commit to a mortgage contract with a primary lender as well as a second lien agreement with HomeBase.

If a homebuyer buys an affordable home at Westgate, can he or she sell it later?

Yes, in the first year of owning an affordable home at Westgate Grove, the owner may sell back the home at the initial affordable purchase price to the HomeBase. After one year, buyers can sell their homes in accordance with program guidelines.

How does the second lien agreement with HomeBase work – do I make a monthly payment?

No, the HomeBase’s agreement is similar to a second mortgage except buyers do not have to pay interest or make monthly payments on the mortgage and principal amount of the second lien for 30 years unless there is a default.

I heard that the affordable homes at Westgate Grove use a fixed rate appreciation model, what does that mean?

Included in the agreement with the HomeBase is a designated appreciation percentage. Pending market conditions and along with the equity invested in the home, the homeowner will receive 2% simple fixed appreciation on the original purchase price of the home. The amount of that appreciation depends on the original sales price of the home and the length of ownership.

 

When an affordable home is sold, payments are made in the following order (after closing costs):

 

  1. The remaining primary mortgage is paid.
  2. The owner is repaid the initial down payment (if applicable) and equity invested in paying down the primary mortgage.
  3. The homeowner will receive 2% of the initial affordable sales price for each year they owned and occupied the property.

 

**This additional payment is made only if the home appreciates beyond the original sales price.

 

This fixed rate appreciation model allows affordable buyers to build equity and realize value on their investment in real estate, while also maintaining the long-term affordability of the property.

Are all the for-sale affordable homes at Westgate being sold this way?

All the for-sale homes currently being sold at Westgate Grove will include these shared-appreciation provisions. Future for-sale affordable homes at Westgate may be sold using different terms in order to meet the needs of a range of homebuyers.

What happens if the home does not increase in value, or if the home decreases in value?

If the home does not increase in value, then HomeBase only recoups the amount of the second lien, because there is no gain to share. If the value of the home decreases, HomeBase’s second lien is repaid based on available net proceeds after the primary mortgage and owner’s equity is repaid (if any).

Can the homeowner pay off HomeBase's second lien?

HomeBase’s Affordable Homes Program is primarily designed to offer the opportunity of home ownership to qualified buyers who typically cannot pay off such a loan before it is due. While the homeowner may repay the second lien amount, it may not be to the homeowner’s advantage to do so. The shared equity amount cannot be prepaid.

Can the homeowner refinance or pull equity from the home?

Yes, if HomeBase has received proper notice and approves the refinance. Since refinancing changes the owner’s equity in the property, and since HomeBase is sharing in that equity, refinancing has to be done under terms that are agreeable to both the owner and HomeBase. The mission of HomeBase and the Affordable Homes Program is to support buyers’ efforts to build financial stability and sustainability. Review of future refinancing agreements is consistent with and an extension of the financial education and counseling that makes up a key component of the Affordable Homes Program.

If I own my home for 30 years what happens?

At 30 years, HomeBase’s second lien comes due and, if not paid, interest on that lien begins to accrue as set forth in the second lien documents. At that time the buyer may consider paying off the second lien or, depending on the status of other liens on the home (i.e. primary mortgage paid off), refinancing the second lien at prevailing interest rates. In addition, at the end of 30 years HomeBase’s purchase option ends.

Does HomeBase's shared-equity program mean an affordable homebuyer will never own his or her home?

No, when a homebuyer signs the final paperwork and closes on his or her home, the homebuyer owns the home. Lienholders do not have ownership interest in a home, only security against it to protect their loans. The only difference is that under HomeBase’s shared appreciation program, the affordable home will carry two liens instead of one. The first lien would be the primary mortgage, as with any other home. The smaller second lien will be held by HomeBase.

 

HomeBase does, as a lien holder, retain certain rights including the right to purchase at resale and the right to have its contribution repaid in the event that a buyer vacates or rents out the property, defaults on the primary mortgage, refinances the home without HomeBase’s prior approval, or other event of default.

Is shared appreciation financing the same as a land trust?

No, although a community land trust is another shared equity tool used to make housing more affordable. In a land trust, the purchaser owns the home but not the land on which it sits. Typically, in a land-trust program, when a homeowner wants to sell, the home would have to go to another qualified affordable buyer, since the land trust would retain ownership of the underlying property. 

Will taxes be assessed on the value of the home or the sales price?

Both HomeBase and the City of Austin are aware of the impact rising property taxes can have on the affordability of housing, both at Westgate and citywide. HomeBase is working with different groups to address challenges that may confront buyers in the HomeBase Affordable Homes Program. Regardless of what is decided, knowing your rights and responsibilities is key to home ownership. Please visit http://www.traviscad.org/faqs.html for more information about Travis County’s tax appraisal process and how you can protest your home’s tax assessment.

Can a homeowner pass on his or her home through inheritance? What happens to the second lien? Does my son/daughter have to purchase it at market price?

In the event of the original homeowner’s death, the home’s title would pass to the homeowner’s designated recipients in accordance with any legal will and/or Texas law. There would be no needs for heirs to “repurchase” or income qualify for the home; however, any liens for the first and second mortgages would still exist.

Can the homeowner ever lease his/her property to a third party?
No, because that would defeat the purpose and spirit of selling the home to a qualified affordable buyer. By renting the home to a third party, the homeowner would effectively become an investor. As such, the owner would be considered in default and the home could be foreclosed on.
Can the homeowner take on a roommate or boarder that is not on the deed?

Yes, as long as the homeowner continues to occupy the home. The rules for affordable homeowners would be the same as for any homeowner at Westgate.

Does the homeowner get a 'credit' for any improvements made to the home?
HomeBase will not “credit” the cost of improvements to the homeowner.
What kind of counseling is available?

HomeBase’s partners provide homebuyer education and credit counseling for buyers who can, in the near term, be ready to qualify for a mortgage, as well as long-term counseling for those who will need more time to be ready for homeownership. HomeBase also intends to offer ongoing education to homeowners.

 

Austin Habitat for Humanity, HomeBase’s counseling partner, offers education and counseling sessions that cover topics such as pre-qualification, ratios, appraisals, reviewing and understanding credit, understanding mortgage and closing costs, property inspections, down payment, fair lending, budgeting, home maintenance and repair, insurance, home safety, and affordable mortgage products. Austin Habitat for Humanity is a non-profit agency providing their services for Westgate at no cost to homebuyers who are purchasing a home at Westgate.

 

In addition, HomeBase coordinates Shared Appreciation Orientation Sessions and conducts individual buyer counseling to address any questions that prospective buyers may have about the program.


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    Consumers wishing to file a complaint against a company or a residential mortgage loan originator should complete and send a complaint form to the Texas Department of Savings and Mortgage Lending, 2601 North Lamar, Suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the Department's website at www.sml.texas.gov. A toll-free consumer hotline is available at 877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department's website at www.sml.texas.gov.

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