PRE-APPLICATION CHECKLIST CITY OF ALISO VIEJO (SHEA HOMES -- VANTIS AND GLENWOOD COMMUNITIES) HOME BUYER ASSISTANCE PROGRAM PRE-APPLICATION CHECKLIST

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1 PRE-APPLICATION CHECKLIST CITY OF ALISO VIEJO (SHEA HOMES -- VANTIS AND GLENWOOD COMMUNITIES) HOME BUYER ASSISTANCE PROGRAM PRE-APPLICATION CHECKLIST 2009/2010 This Pre-Application Checklist is only for purposes of preliminary self-qualification and is intended to be used ONLY as guide for a potential homebuyer applicant to determine if they may be eligible for the City of Aliso Viejo Home Buyer Assistance Program ( Program ). This checklist should be completed by the potential applicant prior to contacting Shea Mortgage to obtain a First Trust Deed Loan or prior to working with another potential institutional lender to obtain a First Trust Deed Loan. This Pre-Application Checklist does not establish, expressly or by implication, that a potential applicant will be eligible for a Loan. This checklist does not need to be submitted to the City s Program Director and is for the sole purpose of preliminary self-qualification by an applicant who desires to buy a new home in the Harbor Station or Latitudes South Communities. I. PROGRAM ELIGIBILITY A. INCOME ELIGIBILITY 1. Please provide Gross Household Income: $ Defined as the combined gross annual income for ALL members of the, including all co-signers and co-mortgagors, if any, who will establish as their principal residence the property to be purchased under the Program. Note: Income information will be verified by both the Lender for the First Trust Deed Loan and City s Program Administrator during the formal application process. 2. Household Size: Household is defined as all persons who will establish as their principal residence the property to be purchased under the Program. The occupants may be a single family, one person living alone, two or more families living together, or any other group of related or unrelated persons who share living arrangements. All co-signers and co-mortgagors, if any, must be part of the Household and must reside in the property to be purchased under the Program. Income limits for Orange County pursuant to Section 6932 of Title 25 of the California Code of Regulations: Income Limits 1 Lower Income - Maximum Allowable Gross Income 1 person 2 person 3 person 4 person 5 person $52,100 $59,500 $66,950 $74,400 $80,350 1 Annual Income Limits are promulgated by the State of California Department of Housing and Community Development (HCD) and are subject to change without notice. 1

2 Locate your size on the Income Limits chart. Is your Gross Household Income (including the gross annual income of all prospective co-signers and co-mortgagors) less than the maximum allowable income limit? IF NO, THEN YOU ARE NOT ELIGIBLE FOR THIS PROGRAM. B. LIQUID ASSETS If you otherwise qualify and decide to purchase a home through this program, do you and all members of your Household, including all co-signers and co-mortgagors; expect to have a total of $25,000 or more in liquid assets (savings and investments other than retirement accounts) after closing escrow on the home? IF YES, THEN YOU ARE NOT ELIGIBLE FOR THIS PROGRAM. NOTE: You may not be sure of the value of your liquid assets. You will be required to describe your liquid assets in detail as part of the Program application. It can then be determined whether the value of your liquid assets exceeds Program limitations. C. SUFFICIENT FUNDS AVAILABLE Total all personal funds you have available in the form of liquid assets (savings, checking account funds, and time deposits which are not subject to penalty for early withdrawal). $ Downpayment Requirements Affordable Purchase Price Required Minimum Down Payment of 5% Maximum Down Payment of 20% $139,100 Harbor Station 1BR $6,955 $27,820 $167,985 Harbor Station 2BR $8,399 $33,597 $121,400 Latitudes South 1BR $6,070 $24,280 $146,100 Latitudes South 2BR $7,305 $29,220 *PLEASE NOTE* With 5% Down Payment you will need approximately $15,000 of your own funds for down payment and closing costs. This amount cannot be gifted. 2

3 By looking at the Downpayment Requirements table above, determine the required 5% minimum down payment for the property you d like to purchase using this Program. Compare your total personal funds that you calculated on the previous page to this amount. Do you have enough liquid assets available to pay both: (i) the minimum 5% downpayment, inclusive of the estimated additional 3% 5% of Purchase Price to pay for closing costs for the type of property that you d like to purchase? IF NO, THEN YOU ARE NOT ELIGIBLE FOR THIS PROGRAM. D. Have you had any Ownership Interest in any real property within the past three years? IF YES, THEN YOU ARE NOT ELIGIBLE FOR THIS PROGRAM UNLESS YOU MEET THE DEFINITION OF A DISPLACED HOME MAKER AS DEFINED BELOW. In order to participate in the City of Aliso Viejo Home Buyer Assistance Program you must not have owned real property within the three (3) years preceding the date of this application. The ONLY exception to this rule is for those individuals who meet HCD s definition of a displaced home maker. A displaced home maker is defined as an individual who is an adult who has not worked full-time, full-year in the labor force for a number of years but has, during such years, worked primarily without remuneration to care for the home and family and may be unemployed or underemployed and experiencing difficulty in obtaining or upgrading employment. Note: You will be required to submit supporting documentation (divorce decree and other information requested by the City) prior to final loan approval. Final determination of eligibility under this definition is at the sole discretion of the City and Shea Homes. II. PROPERTY INFORMATION A. LOCATION Which Community would you like to purchase at? Harbor Station or Latitudes South B. 1 OR 2 BEDROOM 3

4 C. PRIMARY RESIDENCE Do you intend to make the property to be purchased through this Program your primary residence? IF NO, THEN THIS PROPERTY IS NOT ELIGIBLE FOR THIS PROGRAM. Do you understand that all co-signers and co-mortgagors, if any, must make the property to be purchased through this Program their primary residence? III. REPAYMENT TERMS A. CITY LOAN Do you understand that the financial assistance the City is providing is in the form of a deferred loan that is secured by a second trust deed on the property and must be paid back? There is no forgiveness of the City Loan principal unless you reside in the home for 45 years and otherwise comply with all requirements of the Program. Do you understand that if you purchase a home in either of the Glenwood or Vantis Projects using this Program, you will not be able to withdraw equity from the home in the future without first paying off the City Loan and the equity appreciation share? Do you understand that you will not be able to transfer the ownership or title of this home to another person without first paying off the City Loan and the equity appreciation share? Do you understand that up until year 45, if you sell the property, the City is entitled to collect an appreciation share of 25% of the equity in the property in addition to the original principal amount of the City Loan, unless the City Loan is assumed per the Program requirements? 4

5 Do you understand that the Program provides a loan from the City of only a portion of the purchase price of the property and that you will need to qualify for and receive another loan from a commercial lender for the remaining portion of the purchase price? Do you understand that, if you sell the property before year 45, you will be required to make a mandatory Housing Trust Fund Contribution to the program in the amount of 5% of the Area Median Income? IV. PRELIMINARY SELF-QUALIFICATION If you have completed this pre-application checklist to the best of your ability and have determined that you may be eligible, the next step would be to work with Shea Mortgage (or another institutional lender regarding obtaining a First Trust Deed Loan) for possible participation in the Program. The City and Shea Homes (and Shea Mortgage if you select it for your first mortgage) will be able to assist you in determining your eligibility for a First Trust Deed Loan and will instruct you in the next step necessary to submit a formal Application Affidavit to obtain a Reservation Letter for participation in the Program. 5