Shared appreciation is calculated using the market value of the property at the time of repayment, without deducting fees, commissions, or closing costs. In other words, the calculation is based on the gross appreciation of the home, not the net equity after transaction related expenses. KHC will, however, allow the borrower to recover the following before KHC will share in the appreciation. Read below for clarifying language.
The borrower will be able to recover all the following before Kentucky Housing Corporation will share in the appreciation:
Any portion of the Down Payment paid from the Borrower funds
Customary costs incurred by the Borrower in selling the property
Payments of principal made under the First Lien Mortgage
Customary Costs incurred in selling the property.
KHC defines “customary costs incurred in selling the property” as real estate commissions, deed preparation and recording fees, and transfer taxes. Optional seller-paid closing costs for the buyer are not considered in this calculation. These customary costs are not deducted from the calculation of appreciation owed to KHC; rather, they serve as a cap in situations where the home is sold soon after purchase and has not appreciated enough to cover both these customary fees and a portion of the appreciation owed to KHC. In such cases, the borrower’s obligation to repay appreciation is limited so that the customary selling costs can be recovered first.