The DreamBuilder™ Earned Equity Program, is designed to make home ownership more accessible particularly for self employed individuals with 12 months of self employment who might find traditional mortgage routes financially challenging (Reducing the down-payment requirements from 15% to 20% down to 3.5% down). Here’s what you need to know about such programs:
What is an Earned Equity Program?
- Definition: An Earned Equity Program is an innovative approach to homeownership where participants do not need to make a traditional down payment or secure a mortgage in the conventional sense. Instead, they enter into an agreement where they earn equity or ownership in the property over time.
- Mechanism: Typically, equity is earned through mechanisms like rent payments or other predetermined financial arrangements, gradually converting the renter’s payments into ownership stakes.
Benefits:
- Accessibility: It provides a pathway to homeownership for those who might not qualify for traditional mortgages due to credit issues, lack of down payment, or income constraints.
- Gradual Investment: By allowing participants to earn equity over time, it reduces the immediate financial burden and spreads out the investment, making homeownership more manageable.
- Structured Path: These programs offer a structured plan towards owning property, which can be particularly beneficial for first-time homebuyers or those looking to transition from renting to owning.
How It Works:
- Agreement: Participants sign an ownership equity agreement, which outlines the terms of how equity will be earned.
- Qualification: There are eligibility criteria for both the buyer and the property. For instance, the program might focus on primary residential properties to ensure it serves its purpose of broadening homeownership.
- Professional Guidance: It’s recommended to consult with professionals throughout the process to ensure all steps are followed correctly, from understanding the program to finalizing ownership.
Program Eligibility Requirements:
- Primary Residence for Homebuyer(s)
- 580 min Credit Score
- 3.5% Down Payment & Reserves
- Up to 96.5% LTV
- 3 Months Business Bank Statements, 3 Months Personal and 12 Month P&L Statement
- 12 months of verifiable rental history
What Steps are required for a successful closing?
Step 1:
Get Started.
To confirm that you qualify!
Step 2:
Find your Home
After the Homebuyer(s) chooses their preferred property, they enter into a purchase agreement with the property’s seller. Your Broker, knowledgeable in the program, will ensure the property adheres to DreamBuilder Guidelines, and will verify that the contract includes the appropriate wording along with all necessary addenda and disclosures.
Step 3:
Appraisal
Homebuyer(s) will pay for an FHA appraisal to be completed on the property to confirm it is Eligible for the program
Step 4:
Funds to Close
Homebuyer(s) executes the Homeownership Agreement and remits all funds for closing to the title company.
Step 5:
Closing
The purchase transaction is closed at an approved title company.
Step 6:
Move In
Homebuyer(s) moves into the property and begins their journey toward owning the home!
- The option purchase price reduces with each monthly payment made by the Homebuyer(s).
- All appreciation acquired from the date of closing until the Homebuyer(s) purchases the property belongs to the
Homebuyer(s). - At any time, the Homebuyer(s) can sell the home, purchase the property from the FHA eligible government entity, or
assume the existing FHA loan on the property.
Examples of the top self employed professions in the USA!
- Real Estate Agents: Many real estate agents work independently, either as solo practitioners or in small teams. They help clients buy, sell, or rent properties, leveraging their knowledge of local markets and real estate laws.
- Consultants: This includes a wide range of fields like business, management, IT, and marketing consultants. Consultants offer expertise to businesses or individuals, helping solve problems or improve operations.
- Web Developers: With the digital transformation of businesses, web developers create and maintain websites, often working freelance or as self-employed professionals.
- Photographers: Photographers can specialize in various niches like weddings, portraits, or commercial photography. They often build their own brand and work independently.
- Graphic Designers: They design visual content for digital or print media. Freelance graphic designers are in high demand for branding, marketing materials, and online content creation.
- Writers: Freelance writers work in areas like content creation, copywriting, technical writing, or authorship. The demand for online content has increased the opportunities for self-employed writers.
- Bookkeepers/Accountants: Many small businesses and self-employed individuals require bookkeeping or accounting services, making this a viable self-employment option.
- Digital Marketers: Specializing in SEO, social media, or digital advertising, these professionals help businesses increase their online presence and engagement.
- Event Planners: They organize events for clients ranging from corporate functions to personal celebrations. Event planning can be done on a freelance basis with the right network and reputation.
- Carpentry/Construction Management: Skilled trades like carpentry or construction management offer opportunities for self-employment, especially in managing projects or running small construction businesses.
- Caterers/Chefs: For those with culinary skills, catering or running a food truck can be lucrative self-employed ventures.
- Personal Trainers: With a focus on health and wellness, personal trainers can work independently, often renting space in gyms or offering home visits.
- Software Developers: Similar to web developers, software developers can work on apps, software tools, or custom solutions for clients.
- Videographers: They capture and edit video content for events, businesses, or personal use, often working freelance or running their own studios.
- Notary Publics: Providing services for document authentication, mobile notaries can operate on their own schedules and earn well, especially in high-demand areas.