... if you really want to be a "homeowner" (first time only), then this program can help.I came across this company Lotly that offers a shared down payment program. The way it works is that:
- I put in 5% down payment, and Lotly put in another 15% down payment. I can use all this money to buy a place.
- I will pay for all monthly costs like mortgages & maintenance. I get to keep all the equity I pay down through mortgage payments.
- Towards the end, I will pay roughly 50% of home appreciation to buy out Lotly.
Just thinking out loud here, the pros I can see is that
- I could really use some help on down payment to buy the place I want
- There is no monthly payment to Lotly
- I keep all the equity I pay down on my mortgage every month. Better than renting!
- Seems like renovation is allowed
- 50% appreciation is quite a bit to give away, especially if the market does well
- My monthly payment is likely to be higher than what I’m paying for rent atm
- I can’t sell the place in the first 3 years
This program sounds quite interesting to me. What do you folks think of this?
Keep in mind of other details not mentioned:
- aside from the mortgage, usual home maintenance costs later (eg. property tax, utilities, etc.), you're also responsible for all the initial costs incurred for the purchase eg. legal, transfer, fees and taxes, etc. Lotly states this works out to about 3% (additional) costs on your purchase price.
- Don't think about leasing it out - no fixed term or formal lease allowed. It's strictly a "principal residence" occupied by you and/or family.
- You need to buy-out/pay back Lotly investors within 10 years of the program.
- No guarantee that your house will "appreciate".