Buying into Rooted NW: How does it work?

By Katie McCamant, developer project manager for Rooted NW

So at some point Rooted Northwest captured your interest and that led you to this article. If you’re like the rest of us, you’re probably really excited about community living and farmland preservation. However, you may be wondering about how the mechanics of becoming a homeowner here actually work. Have no fear! This article should answer all your questions.

The Financial Mechanics of Homeownership at Rooted NW

Upon completion of construction, you can get a standard mortgage to buy into Village One at Rooted Northwest. While this community will certainly be special, we do all we can to set up the home ownership to qualify for standard mortgage products (Freddie Mac, Fannie Mae, Vet loans, etc.) at competitive rates. You are ultimately buying a home, fee simple, in a development with a homeowner’s association. 

The tricky part is getting Village One built in the first place. To get a construction loan to build the homes and common facilities, we need to show there are real buyers for this community who can purchase the finished homes – thus our goal is to have committed buyers for 75% of the homes in Village One before applying for a loan.

To show we have committed homebuyers, as well as to get the development cash flow before starting construction, we are looking for all homebuyers (Agrivillage One, LLC Members) to have 20% of your estimated home price invested in the LLC before the start of construction. These same funds will then be applied to your down payment when you purchase your home at the end of construction. 

HOA Dues: Keep in mind you will have monthly Homeowner Association (HOA) dues, which cover shared costs as you would have with any home ownership along with the operation and maintenance of the common facilities. For instance, HOA dues are expected to cover the property insurance of all the buildings (you just get insurance for your belongings inside), water and septic fees, garbage and recycling pick-up, and funding reserves for long-term building and grounds repair and maintenance. 

How do I know what I can afford?

You can talk with any mortgage broker about how much loan you qualify for. The amount you qualify for will depend on mortgage interest rates at the time of purchase (we surely wish we had a crystal ball!) and your personal financial situation. Rather than try to explain cohousing or the Rooted NW Community to a broker, we recommend you just say you want to see how much mortgage you can qualify for assuming you will also have $500/mo in HOA dues. Please ask if you are looking for a mortgage broker to work with and we can give you some names. 

It's worth digging into the details with your mortgage broker because you still have a year or two to improve your financials for this mortgage. How can you improve your credit rating? Do you have debt you can pay down? Are there mistakes on your credit report? What repairs and clean-up do you need to do to get the best price on your current home? As we get closer to completion of the Rooted NW homes, resist any significant expenditures. This is not the time to buy a new car! 

The process of purchasing your home at the end of construction is relatively easy. We expect the community will be working with one or two lenders or mortgage brokers who will underwrite the project in advance. You can give them the Purchase & Sale Agreement for your home (typically not done until the year before construction is complete) and get everything ready to go. Then as soon as we get the Certificate of Occupancy from the building department, you can close on your home and move in. For closing, we’ll all be working with the same title company who will prepare all the loan and closing documents for your signature.  

A couple of things to keep in mind: 

1. Your investment in AV1, LLC will be credited toward your down payment, at least up to 20% of the home price. If you have more than 20% of your home price invested, we will need to work out what can be applied to your down payment with the construction lender. Any investment you don’t take toward your down payment will be repaid after all the homes in Village One are sold per the terms of your promissory note. 
2. Most communities collect two months of HOA dues at home closings for the start-up of their homeowners association. 
3. You cannot move in or do anything in your new home (paint that accent wall or install curtains) until you have closed. There are just too many liability issues to take a chance. 

The good thing is that we will all be working together closely to get people into their homes as quickly as possible at the end of construction. And since we’ve all been together on the journey to get this community built, you’ll be moving into a new neighborhood with friends you already know!

If you’d like more information you can sign up for an online Info Session.

Attended an Info Session already? Take the next step and email us to set-up a tour of the land.  Contact us or send email to [email protected].