The housing industry is financially engineered in the United States because it is the first need to consider before moving to live and work in any community. One may choose to buy a home for investment, negotiate leasehold for a number of years, or just rent monthly as a consumer. Many families are not informed about the differences though monthly rent or monthly mortgage payment may be the largest expense item in their families. It is public policy to leverage every American family buying a decent home for investment. Hence, a family or household with good credit could obtain low-interest long term mortgage loan up to 30 years. The monthly payment on such a loan could be significantly lower than the monthly rent for the same house. Monthly rent should cover the management and maintenance costs, as well as the monthly mortgage payment by the landlord. Therefore, a renter must be paying more! However, rental homes are commonly confused with homeownership because many low-income households are subsidized to rent under public housing programs. It is public policy to subsidize low-income households because many of them do not have good credit financially, and their incomes are below market prices of decent homes for the monthly mortgage payment. A landlord would rather retain ownership as long as the monthly rent covers all maintenance costs and monthly mortgage payments. On the other hand, renters are not usually informed about their landed property rights for housing. Adequate and decent homes are for households to invest for improved living conditions. A renter is paying the landlord to invest in the property. A renter with significant down-payment could negotiate low monthly rent for the duration of a lease agreement. That is, a tenant could negotiate to be leveraged by the landlord, though the practice is not common.
The principal portion of a monthly mortgage payment is like putting money into a savings account. One could pay more of the principal portion every month so as to pay-off the entire loan much earlier than the stipulated 30 years. One should avoid the temptation of borrowing against the equitable value being acquired as a result of those principal payments and the down-payment at purchase. It is like borrowing money from one’s deposit savings account. Rather, one should use home equity loan to pay off the principal portion of outstanding mortgage loan faster. It is critical to understand this homeownership investment strategy because a greater portion of mortgage loan is interest payment.
Hence, a nonprofit strategy for low-income families is to collaborate as investors in their local housing marketplaces. Such collaboration could take the form of a voluntary network of existing and prospective homeowners through the nonprofit organization. The organization will be helping collaborating households to manage various equitable values of their homes as mutual benefits. Thus, equitable values of their homes could be used to pay off outstanding loans while they pay the organization back without interest charges. The nonprofit private equity organization complements public policy in the housing market. The nonprofit community-based real estate management approach is explained by Odetunde, J. (2019). Housing every American family to ensure social justice. Beau Bassin, Mauritius: LAP Lambert Academic Publishing. The purpose of the nonprofit organization is to encourage helping one another become homeowners, mutually protect their home equities, and secure some measure of financial security. Public policy is that every family deserves a decent and adequate home to invest and live.