FAQs
Ø How is the amount of the approval determined?
The applicant’s current income and current monthly debts will be evaluated to determine what loan amount they will qualify for at the end of the 5 years. The evaluator will then take this loan amount and adjust for the 50% adjusted price to give us the applicant’s current approved price. For example, if a client qualifies for a $225,000 loan amount, the evaluator will divide this amount by 1.5 to come up with a current approved price of $150,000. All of the estimates and approvals will usually only indicate the 5 year pricing. The applicant will still have the ability to execute the purchase beginning in year 3 at the lower adjusted price. We want to make sure the applicant has an idea of what their financial situation would be if they needed to wait until the end of year 5 and the value of the home was at the full 50% adjusted price.
Ø If the client doesn’t have enough income to qualify will we allow co-signer?
No. We do not allow co-signers from client’s parents, children, etc.
Ø If the applicant is in the process of a short sale do they qualify for the program?
If client is in the process of short sale or has completed a short sale we will need the approval from the lender indicating they accepted payment in full and no future collection will occur. If the client is in the process of a short sale they may begin the program before the short sale is completed, as long as the loans secured on the property were obtained for the purchase. If there are loans secured on the property that were initiated after the purchase, the client will need to complete the pending short sale before they begin the program. We will require documentation from all lenders that the short sale has been approved and clients will not be liable for any shortfall.
Ø If an applicant is listing their home for a short sale can VFI purchase the home and lease it back to them?
We cannot purchase the clients home. We can however assist them to find a similar home in the same neighborhood.
Ø If the applicant is in the process of a foreclosure do they qualify for the program?
It is acceptable if the foreclosure has not been completed as long as the loans secured on the property are purchase money loans.
Ø Does the applicant need to have all of the money for the program before applying?
No. Applicants can apply and receive an approval while they are trying to save the money for the program. Once the applicant can document they have the money for the program they can work with an agent and begin their search for a home.
Ø What determines the future purchase price in year 5?
At the end of year 5 the purchase price of the home is market value up to a maximum of 50% above VFI’s purchase price (including any repair costs). The minimum purchase price is 15% above VFI’s purchase price. For instance, if VFI purchases a home today for $150,000 including repairs and the market value is $150,000 at the end of year 5, the purchase price will be $172,500. If the market value of the home at the end of year 5 is $300,000, the applicant would only pay the 50% adjusted price of $225,000.
Ø What determines the future purchase price in years 3 or 4?
At the end of year 3, the home is at a fixed price 30% above VFI’s original purchase price.
At the end of year 4, the home is at a fixed price 40% above VFI’s original purchase price.
Ø What happens if the home doesn’t appraise for the 30% or 40% adjusted price?
The applicant would need to pay the difference between the appraisal and the adjusted price or wait until the end of year 5 when the purchase price of the home is market value, but capped at the 50% adjusted price. If the value of market value of the home is below the 15% minimum price they may use their accumulated purchase credits to pay the difference.
Ø Are pets allowed?
There is an additional $100 deposit required for each pet. There are four breeds of dogs that are not allowed; Pitbull, Mastiff, Rottweiler and Doberman Pinscher. VFI reserves the right to add to this list at any time.
Ø How soon will the client move-in after close of escrow?
Typically, the move in should be scheduled for one week after close of escrow to allow for repairs to be completed. However, it may be longer if the repairs require more time for completion.
Ø What types of properties qualify for this program?
Single Family Residence homes that are located within the city limits. The home will need to be in a safe neighborhood and the repair required will need to be mainly cosmetic items.
Ø What types of repairs are required to be completed?
It is important and mandated that the property has all safety items repaired and are operational. Any repair item that could lead to a substantial defect with the property will also be required to be completed. Below are examples of some common repair items.
Safety items
Smoke detectors, GFCI Outlets, Range anti-tip device, self closing garage doors, interior keyed locksets. The normal budget for safety items is between $800 and $1200.
Repair items
We see a lot of items pertaining to leaking plumbing fixtures and drains in the kitchens and bathrooms. There are usually miscellaneous items pertaining to window screens, sliding glass doors, weather-stripping, window lock mechanisms. On the exterior of the home we see facia repairs and gutter repairs quite often. The repair items and the cost for these items can vary greatly.
Maintenance items
Mostly we see issues related to caulking in the bathrooms, and sealing the grout and tile. Normally we leave these items for the homeowner.
