A trend to ease the minds of people making major purchases through installment payments has moved from the auto dealership to the builder's model.
Hyundai started the ball rolling late last year when it offered to let purchasers return their new car with no hit to their credit rating if they lost their job.
That seemed to get everyone thinking, and within a few months several area builders were offering their own version of this safeguard. Some were even sweetening the pot with many more protections and incentives.
The builder now offering the most expansive program is Bigelow Homes. At its two Aurora communities, Bigelow offers a six-point plan to help people overcome fear that is keeping them out of the housing market. The plan is offered through July 19, according to Jamie Bigelow, president of Bigelow Homes.
"We understand that there are a number of reasons why people are reluctant to jump into the housing market," Bigelow said. "However, if you can overcome those fears, it's a great time to buy.
"After a lot of brainstorming, we figured out a way to reassure our buyers that their investment is safe," he said.
In essence, the builder eliminated the things that keep fretful buyers up at night. New Bigelow homes at HomeTown Aurora and HomeTown Farnsworth now have the following safeguards:
• Mortgage payment protection: If the buyer becomes unemployed, the developer will make the mortgage payments while the buyer looks for a new job.
• Home price protection: The developer will guarantee that the home price will never be lower than the price the buyer paid. This means that if the home price does go down, the owner will be reimbursed the difference.
• Low down payment: In many cases, buyers can take advantage of Bigelow's Sweat Equity program in which they allow people to paint the interior of their home themselves to earn credits toward their down payment.
• A new home warranty: Everything in the home is covered under a comprehensive warranty, which means you won't have any unexpected expenses after you move in.
• Heating bill guarantee: Because Bigelow homes are constructed to be energy efficient, the developer guarantees that if your heating bills exceed $400 per year in any of the first three years, Bigelow will reimburse you the difference. This does not include air conditioning costs.
• Flexible living space: Bigelow Homes' floor plans are flexible enough to accommodate a home-based business with all of its tax advantages, or separate private living quarters for a roommate to share expenses.
"When we first announced this program this spring, it tripled our traffic," Bigelow said. "Things have leveled off since then but people continue to be interested."
This offer extends to single-family homes and row houses at HomeTown Aurora, which is almost sold out, and across the street at HomeTown Farnsworth, which recently opened.
"Between the reasonable prices, the historically low interest rates and the recession-proof protection, I can't think of anything that would make buying one of our homes a safer investment than it is now," Bigelow said.
For more information about Bigelow's program, visit bigelowhomes.com or call (630) 851-8040.
While Bigelow has the most aggressive plan, it is not alone in offering recession-protection plans.
Marquette Cos. is easing homebuyer uncertainty with its Worry-Free Buyer program at the Front Street Lofts in downtown Lemont. This mixed-use development features 82 lofts about 24,000 square feet of first-floor retail space.
Their program offers:
• Job loss mortgage insurance: The developer will purchase a policy that will make your mortgage payment, up to $1,500 per month for six months, if you lose your job within 24 months of closing.
• Home price guarantee: If the developer closes a comparable residence at a lower price within 12 months of your closing, you will be refunded the difference.
• Mortgage rate guarantee: Preferred lenders will refinance your mortgage at no cost if interest rates decrease by more than a quarter of a percent within one year of your closing.
"Many buyers today are ready to purchase a new home, but are either waiting because they think home prices will continue to drop or they're worried about losing their job and being unable to make their mortgage payments," said Art Bettuzzi, general sales manager for MRH, the sales and marketing agent for Front Street Lofts.
"Rather than taking the wait-and-see approach, our Worry-Free Buyer program alleviates some of the risks involved in the home-buying process."
For information about Front Street Lofts, call (630) 243-6162 or visit lemontlofts.com.
Empeco Custom Builders has added a unique equity protection program to its marketing efforts.
Mark Perlman, president of Empeco, said he is willing to mitigate buyers' risk by offering the program to either build-to-suit clients or to a buyer interested in purchasing his model home at Long Meadow Farms in unincorporated Lake County near Long Grove.
Perlman is making available to buyers the Equity Lock Financial program. Under this policy, which costs the builder 1.5 percent of the purchase price of the home, Equity Lock will keep tabs on the local real estate pricing index in each town. When the buyer resells the home, if that local pricing index has dropped by 10 percent or more, Equity Lock Financial will cut the buyer a check equal to 10 percent of the original purchase price of the home.
"This program is not based on the worth of the particular home involved, just in case the buyer does not keep it up," Perlman explained. "Instead, coverage is based on the market in the town in which the home is located."
Several other builders are offering mortgage payment insurance in the case of an involuntary job loss.
At J. Lawrence Homes' communities in Wadsworth and Joliet, a mortgage job loss insurance program is offered that pays up to $1,800 a month for either six or 12 months if you lose your job within two years of closing. This does not, however, apply to those who are self-employed, on strike or lockout, or on any kind of disability. It also doesn't take effect until 60 days after closing.
"Today the No. 1 reason for mortgage defaults is loss of employment," said a spokesman for Platinum Home Mortgage Corp., the company that provides the coverage to J. Lawrence Homes. "This is why the Involuntary Loss of Employment coverage is such a tremendous benefit. It protects homeowners from the very thing that can put their households into financial crisis."
For more information on the J. Lawrence Homes worry-free program, call (630) 281-4730 or visit jlawrencehomes.com.
Town and Country Homes now automatically gives the Mortgage Guardian program to all buyers. This program pays up to six monthly mortgage payments of up to $2,000 per month while you look for a new job.
It protects the buyer's financial security by keeping savings, retirement and college funds intact in the event of a job loss and gives you time to get your employment back on track. For more information, visit townandcountryhomes.com or call (630) 953-2222.
Lakewood Homes offers job-loss insurance for the first two years if the buyer requests it, according to Chris Shaxted, executive vice president.
"The job-loss insurance is just tool in our toolbox to help ease buyers' fears if they are concerned about their job," Shaxted said.
The plan covers mortgage payments of up to $2,500 per month for six months, but the coverage must be specifically opted for in the purchase contract. For more information, call (847) 884-8800 or visit lakewoodhomes.com.
Some Chicago builders also offer mortgage-protection programs. For instance, at its 200 N. Dearborn condominium conversion building, American Invsco offers a Reassurance Program that is a special loan forbearance coverage provided in case of involuntary unemployment.
"If you lose your job anytime during the next 10 years, you may skip your monthly interest payment for up to one year," said Nicholas S. Gouletas, chairman and CEO of American Invsco. "If you lose your job for more than a total of 12 months, we will let you return the condominium, in salable condition, with proof that the real estate taxes and assessments are current."
For information, call (312) 558-1200.