How does Habitat work?
We actively solicit donations of land, labor, materials and money to build simple, decent, affordable houses. The donated labor of our volunteers is actually the “subsidy” we provide to our homeowners, and it ensures that we can build houses at a surprisingly low cost.
Habitat‑built homes are modest in size and amenities: usually about 1000 square feet with three bedrooms and one and a half bathrooms. Our first Pamlico house was built for about $55,000. Pamlico County assessed that house at over $91,000 for property tax purposes. We also received an independent appraisal of the house at $110,000. You can look at these tax and appraisal totals as the value of our volunteer's and family partner's time invested in construction of the house - in other words, our "sweat equity".
Upon completion, Habitat sold the first house to our family partner, Hazel Credle, for what we have invested, $55,000. To ensure the "affordability" of her house payments, we set Hazel's mortgage repayment period at 28 years. This ensured that her mortgage payment, plus her housing related expenses, will be less than one-third of her income. That is our definition of "affordability" in housing.
To be more specific, our first house, built for $55,000, and with a 28‑year no‑interest mortgage (and after a $500 down payment), costs our Family Partner $162 a month. Escrows for homeowners insurance, county and town taxes, and termite treatment are $137 per month. These amounts render Hazel's monthly housing expense to be $299. When you add utilities and phone service, her total monthly expenses are less than 30% of her gross monthly income.
Our homeowner partners are not just building and buying their own decent homes. They are also providing their family with an increase in discretionary income and an appreciating, rather than depreciating, asset. They will also create attendant opportunities for economic stability, economic options and eventual improvement in their overall economic situation.
Importantly, all of Hazel's monthly mortgage payments will be deposited to our local Fund for Humanity, which may only be spent to build additional affordable homes. As all Habitat
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homeowners pay their own mortgage, they also contribute to decent housing for others in need.