Financing Your First Home: ZeroDown vs HomeLLC
Homeownership has become a difficult dream to achieve for many eager young adults looking to start building their lives. Not many people have 20% saved up for the down payment, not to mention the additional savings required for closing costs and fees. It’s not surprising that many people are turning to down payment programs to assist them in the process!
ZeroDown and HomeLLC have a lot in common. These are both unique, non-traditional down payment programs born out of a simple problem – the current mortgage loan process is not working. Here’s how they compare practically.
- ZeroDown: Only available in select cities.
- HomeLLC: All U.S. citizens and permanent residents.
Minimum Down Payment
- ZeroDown: 0%
- HomeLLC: 2%
- ZeroDown: Max home price of $1.5 million.
- HomeLLC: Maximum home price of $2.5 million.
Chance of Buying a Home
- ZeroDown: Very likely, since ZeroDown purchases the home for you and then gives you the option to buy it from them with no competitors.
- HomeLLC: Sellers are likely to accept offers, since the closing process is seamless and guaranteed.
- ZeroDown: 0%
- HomeLLC: 0%
Upfront Mortgage Insurance Fees
- ZeroDown: One-time fee of $10,000.
- HomeLLC: None.
- ZeroDown: All payments go directly to ZeroDown. Payments are likely to be higher at first, due to the fact that they are charging rent – not collecting mortgage. If you should decide to buy the property, monthly payments may go down depending on your down payment.
- HomeLLC: Since the down payment is generally 20% here (with HomeLLC’s investment), mortgage payments stay low due to a low LTV ratio (80%).
Additional Monthly Fees
- ZeroDown: None.
- HomeLLC: None.
Portion of Appreciation
- ZeroDown: 0% – unless you choose to buy the home from them (their selling price will increase 2.5% annually). Once you own the home, 100%.
- HomeLLC: You share your home’s appreciation value with HomeLLC.
Portion of Loss on Home
- ZeroDown: If you decide to purchase the home from ZeroDown, you will incur 100% of the losses, in addition to the money already spent in monthly payments to ZeroDown and the increased housing price (selling price increases 2.5% every year you choose to continue renting). If you continue renting and move on – you will incur 0% of the loss on the depreciation value of the home.
- HomeLLC: You share any losses with HomeLLC.
While these two programs have a lot in common, they also differ in many ways. ZeroDown is more of a phased in approach to home ownership. They purchase the home for you (for a $10,000 one-time fee) and allow you to rent from them until you are ready to buy. When you are ready to make the jump, you don’t have to worry about dealing with competitors. The house will be yours once you decide you’re ready to complete the purchase.
This might be a great option for someone who is already financially stable – but for the average American looking to get out of the rental cycle, this just elongates the process. ZeroDown essentially has clients pay them to become their new landlord while the price of the home appreciates in value, and then charges these clients more money to purchase the home in their timing. Once he or she decides to buy, they are still left to pursue a mortgage lender, since none of the payments so far have actually gone towards a mortgage payment.
HomeLLC is not in the game to become a landlord. We work with our clients and invest in their home ownership dream by tapping off their down payment to make sure it reaches 20%. HomeLLC doesn’t own the home – you do. From day 1. You can enjoy reduced fees, lower mortgage payments, and confidence in the buying process with our partnership. Visit our website or schedule a call to learn more!