Community Land Trusts (CLTs) make homeownership more accessible by removing the cost of the land from the initial purchase price, resulting in a smaller down payment and lower monthly payments. This creates an affordable alternative to renting for some families, and allows them to build equity through their monthly mortgage payments. In exchange for buying the house at a lower price, MWCLT homeowners agree to sell the house at a reduced price, and “pay it forward” by receiving half of the appreciation value (the difference between the market value at the time of purchase and the market value at the time of sales). The rest stays with the house and keeps the home affordable for the next buyer.
|Rental||Conventional Home Ownership||MWCLT Home Ownership|
|Ownership||Renter does not own any part of the property||Homebuyer purchases the land and the structure||Homeowner owns the house and has a 99 year lease for the land beneath|
|Equity||A renter earns no equity in their home – any increase in the value of the property belongs to the owner||Homeowner earns equity from the principal portion of the mortgage payments||Homeowner earns equity from the principal portion of the mortgage payments|
|Taxes, maintenance, improvements||The landlord is responsible for taxes, maintenance, and improvements||Homeowner is responsible for taxes, insurance, maintenance, and improvements||Homeowner is responsible for taxes, insurance, maintenance, and improvements|
|Moving||A renter can leave – when lease is terminated – usually 12 months||Homeowner must sell or rent the home when he/she moves||Homeowner must sell the home to move|
|Profit at sale||None||Homeowner earns all of the equity from monthly mortgage payments, plus all of appreciated value upon sale of home||Homeowner earns Homeowner earns all of the equity from monthly mortgage payments, plus the increase in the value of the home, based on the increase in wages in the area.|
|Monthly payments||Rents for good quality apartments can be expensive – the Fair Market Rent (average)for 3 bedrooms in Richmond is $1,276||Estimated mortgage payment (including Principal, Interest, Taxes, Insurance) for $185k home: $1123||Estimated mortgage payment (including Principal, Interest, Taxes, Insurance) for $185k home: $993|