Our families take great pride in their homes and are usually able to stay current in their payments. Of the more than 400,000 Habitat Houses built around the world so far, only 1.18% have experienced foreclosures. Staunton-Augusta-Waynesboro Habitat for Humanity has never had to foreclose on a home. SAW Habitat has had to terminate partnerships with 3 families who were not allowed to purchase a home in our program because of their inability to pay or unwillingness to partner (incomplete sweat equity hours/not showing up for work on a home). The families’ success as homeowners can be measured in many ways. None of our Habitat families’ children have dropped out of high school. Twelve have gone on to college. Children’s grades and personal expectations for their own lives often improve when they move from a substandard, crowded, or high-crime situation into a simple, decent, affordable home. Partner families gain not only equity, but also personal confidence and satisfaction from helping to build a house and then becoming proud homeowners and contributing members in their community.
Partner family mortgage payments are deposited into Habitat’s “Fund for Humanity,” which is used to further Habitat’s mission by paying for more land and houses. Through this revolving loan fund, donations to Habitat help build new homes for generations to come. A donation to Habitat or to Habitat’s endowment fund is a perpetual investment in decent, affordable homes for qualified families.
A typical Staunton-Augusta-Waynesboro Habitat for Humanity house is appraised at a value between $130,000 and 150,000. The typical first mortgage is about $90,000. Habitat also holds a forgivable second mortgage equal to the difference between the appraised value and the first mortgage. That mortgage covers volunteer labor and some other donations. The second mortgage – representing a gift of volunteer service to Habitat – is not paid by the family unless they decide to sell or refinance the home, at that time, this second mortgage would be due. In addition, Habitat has an Appreciation Sharing agreement with each partner family. This means that the first time the house is sold outside of the family; Habitat will get an amount equal to the percentage of payments left on the home. If the family has a 30-year mortgage and has paid 15 years, then they would receive 50% of the appreciation and Habitat would receive the other 50%. The interest-free first mortgage and the silent second mortgage give the family a good deal. The appreciation sharing agreement and due on sale second helps Habitat to be a better steward of donations of time and money allowing us to pay the gift forward to another low-income family. Habitat also retains a right of first refusal to purchase each home in case a family must move and it would be Habitat’s desire to purchase the house for low-income another family. We put covenants in the deeds, which prevent homes from being used as rentals and work with families on maintenance and upkeep. When we are able to build clusters of Habitat homes, those neighborhoods remain stronger if they remain owner-occupied.
Habitat’s partner families help build their own homes and those of other Habitat families. They are required to contribute at least 200 hours of “sweat equity” depending on the number of adults in a family. This time is spent helping build houses or volunteering for Habitat in other ways. Many families catch “Habititis” and continue volunteering long after they have finished their required hours and moved into their own homes. Partner families also pay $80,000-$110,000 (depending on location and the number of bedrooms) in an interest-free mortgage, held by SAW Habitat for Humanity. Local volunteers build the houses with some supervision from Habitat staff and that volunteer labor saves each partner family $30,000 or more in labor cost. Mortgage terms vary from 15 to 40 years, depending on the family’s ability to pay. Most families carry a 25- to 30-year mortgage and pay about $300-$400 per month in principal payments, real estate taxes, and property insurance. The mortgage covers the cost of building materials, supervision, and some land and development costs. Rising land costs continue to present one of the largest challenges to home ownership in our area.
Habitat selects families who live in substandard or overcrowded housing and whose income is between 25% and 60% of area median income. This places the focus on families who would have very little chance of becoming homeowners without Habitat. For example, the minimum annual income for a family of four living in Staunton-Augusta-Waynesboro is $16,500. Habitat families are selected based on need for housing, ability to pay the mortgage, and willingness to partner with Habitat to build houses.