When considering the California Dream For All Shared Appreciation Loan program, one important question that may arise is whether the loan is assumable. Loan assumptions allow a new buyer to take over the existing mortgage when a property is sold, rather than the seller paying off the loan and the new buyer obtaining a new mortgage. In this article, we'll explore whether the Dream For All loan is assumable and what that means for homeowners.
The Dream For All Loan is Not Assumable
The California Dream For All Shared Appreciation Loan is not assumable. This means that when a homeowner sells or transfers their property, they are required to pay off the full loan balance, including the shared appreciation amount, rather than allowing the new buyer to assume the loan.
What Happens When You Sell or Transfer a Property with a Dream For All Loan?
If you have a Dream For All Shared Appreciation Loan and decide to sell or transfer your property, you will need to repay the entire loan balance, which consists of:
- The original principal amount of the loan
- The shared appreciation amount, which is a percentage of the property's appreciated value as outlined in the loan terms
The shared appreciation amount is based on the difference between the original purchase price and the current appraised value of the property at the time of sale or transfer. This amount is in addition to the original loan balance and must be paid off along with the principal.
Why Loan Assumptions are Not Allowed for the Dream For All Loan
The Dream For All Shared Appreciation Loan is designed to help first-time homebuyers achieve homeownership while also providing a return on investment for CalHFA. By requiring the loan to be paid off upon sale or transfer, CalHFA can reinvest the shared appreciation funds into the program, allowing more first-time homebuyers to benefit from the Dream For All loan in the future.
Additionally, the shared appreciation structure is specific to the original homebuyer and their unique financial situation. Allowing loan assumptions could complicate the shared appreciation calculations and make it more difficult for CalHFA to administer the program effectively.
Navigating the Sale or Transfer of a Property with a Dream For All Loan
If you have a Dream For All Shared Appreciation Loan and are considering selling or transferring your property, it's essential to work with a knowledgeable and experienced lender who understands the program requirements. They can help you calculate the total amount due, including the shared appreciation, and guide you through the payoff process to ensure a smooth transaction.
Let Tennant Lending Help You Navigate the Dream For All Loan Program
At Tennant Lending, our team of expert loan officers is well-versed in the California Dream For All Shared Appreciation Loan program. We can help you understand the loan requirements, including the non-assumable nature of the loan, and assist you in navigating the sale or transfer of your property when the time comes.
Whether you're a first-time homebuyer looking to take advantage of the Dream For All loan program or a current homeowner with a Dream For All loan considering your options, Tennant Lending is here to help. Subscribe below.