How do low-income families ever afford a house? With mortgage interest rates around 7% (with good credit history) and a 20% down payment, it’s difficult for any first-time homeowner to buy. The cost of rent has skyrocketed in recent years, and renting does not provide the stability people get when they buy a house of their own.
Habitat for Humanity believes that everyone should have an affordable place to call home. They also believe that when a family owns a house, they are building a better life for themselves, and they are building a stronger community.
I recently met with Harold Roller, president of the Alliance branch of Habitat for Humanity. The Alliance branch was formed in 2005. Since that time, they have built four houses from the ground up. They have also gutted and remodeled an additional four houses for homes in our community.
The first houses built by the Alliance Habitat branch cost $75,000. Now Roller estimates that the cost is $140,000. Habitat will carry a 30-year mortgage at 0% interest for the family that is chosen to receive a house. They make monthly payments on their loans, with part going into tax and insurance escrow and the remainder toward the principal. This works the same as a mortgage from a bank, except that there is no interest, the largest portion of a mortgage payment on a new bank loan.
Habitat homeowners give the local branch first buyback options if they can no longer remain in the house until the end of the mortgage period. This prevents homeowners from taking advantage of the original low cost and selling the house at a substantial profit.
When the local branch has enough assets from loan repayments, they begin to accept new applications. Applicants must be low income, earning less than 50% of the median income for our area. They must have a job and have a good credit history. Each application is evaluated by the board of eight, who determine which one household is most deserving. The paperwork is completed, and the building project begins!
Roller stressed that Habitat for Humanity is not a giveaway program. Habitat’s homeowner families buy the houses that Habitat builds or renovates. Habitat homeowners are required to invest at least 400 hours of their own labor working alongside volunteers. Their sweat equity brings down the cost of the building.
Another great cost saving comes from the Whirlpool Corporation. Whirlpool donates appliances for Habitat houses. At this time that means the household receives a new stove, refrigerator, dishwasher, microwave, washer and dryer. Schneider Electric donates electric equipment like panels and circuit breakers for Habitat houses throughout the United States. Many states and communities have additional businesses that give generous donations of materials or money to support the idea of affordable housing.
Habitat for Humanity was started in 1976 in Georgia by Millard and Linda Fuller. It is an independent, nonprofit, ecumenical Christian housing ministry. As a long-time volunteer, former President Jimmy Carter brought a lot of publicity to Habitat, which helped the program grow throughout the nation.
Habitat is funded by donations, not by the government. However, the Alliance Habitat group does ask the City of Alliance to donate a vacant lot when they are ready to begin a new project.
Roller is concerned that the local construction crew is aging out. With most of the current team in their 70’s and 80’s, they cannot continue to safely continue to do things like climb on ladders and roofs. He is hoping to turn the reins over to a new crew committed to the dream of Habitat for Humanity. More on what this will involve in next week’s column.