Progress through NACA!
Hi Everyone! It has been awhile since I've posted. I took a few steps back and really thought about real estate and how it would fit into my life. I was tossing around the idea of a multifamily home vs. single family. Although I love MF’s, my boyfriend and I have decided to purchase a large single family and possibly rent out rooms (which I know will come with lots of challenges in and of itself).
The exciting news is that we had a one-on-one meeting with our NACA rep. about obtaining a mortgage. They are willing to work with us and approve us for up to $288k. We will only be looking for $150-200k. I was a bit taken aback when I heard how much they would approve us for but also excited.
For those of you that don't know NACA, aka Neighborhood Assistance Corporation of America) is a group that helps people obtain mortgages that would have a hard time going through the normal system. They assess your income, debt, timely payments and other factors. It is an extensive process. You are required to volunteer five times each year; there are several meetings and a lot of paperwork that needs to be done.
On the plus side--NACA offers you A LOT! You receive counseling (pre and post mortgage). There is no limit on how many points you can buy. There are no closing cost (paid for by the lender) and no down payment. You are able to also get the cost of remodeling put into your mortgage (but you have use NACA approved contractors). There is no PMI but a $50 monthly fee (that helps keep NACA services free).
I found out about this group through a friend and here on BP. We have a few more documents to submit and a phone meeting on Feb. 10th. At that point, our counselor will submit our application to the underwriter.
If you are interested in this program, I would recommend looking into them (although they are not in every city). There are a lot of hoops to jump through (meetings, submitting paperwork, etc); however, I feel it is worth it.
I know this was a long post but I wanted to update folks on what was happening for me and my first home purchase. As well as provide some basic information about NACA. I will post throughout the process so that others can get a sense of how this program works!
Thanks for sharing! How long did it take you from the time you submitted your paperwork to getting approved for the loan?
Carrie, we haven't been fully approved yet. They tell you the max they would work with you for. The paperwork to get "approved"/qualified is will be sent out on Feb. 10th for me. It can take a month to get an appointment in order to go over your paperwork and discuss your maximum amount they would lend you. If you have all of your ducks in a row (aka all the required paperwork) and no past dues on your credit report it can move very quickly.
@Elisha Keller I considered using NACA to buy my first multifamily, but I decided to go another route. I would love to follow you through the process. I still recommend the program to others. Perhaps you will consider doing regular updates like J. Scott has done with his New Construction and Rental property threads? Keep us posted and best of luck!
Thank you Jenna! I think that is what I'm going to do--regular post to keep folks updated and provide some insite into NACA!
Hi:
I went to my first NACA saturday meeting one year ago in February 2013. On 31JAN2014 i closed on my 3 unit. The details..without getting too personal...I paid about $45,000 out of pocket; $24k was to buy down my mortgage to %2.25...yes...you read that right...%2.25 fixed for 30 years. The other $21k was closing costs that you won't ever be able to get out of.
My mortgage is $520k principal, $31.5K for repairs...A new roof, termite treatment, and bunch of other little things. You have to use NACA's HAND department way overpriced contractors.
The nitty gritty: My mortgage with taxes and interest is $2800 a month, my income from renting two units is $2595. So Every month I'll pay $205 + water and my own gas and electric. My rents are undermarket by $100 a month...so After repairs are done, I will give notice and raise the rents by $100, and then my cost is $105 + expenses a month... : )
The process was a nightmare. I was originally supposed to close in November, then early Dec, late Dec, early jan, mid jan, and finally it happened at the end of January, there is endless, mind numbing amounts of paperwork you will have to provide to NACA. The best thing I did was by own "all in one" printer/scanner/ fax from Costco for $200. You will have to provide the same document 2x or 3x because they cant find it. You will have to volunteer on Saturdays. I was at the end of my rope in January, and ready to throw in the towel, and thought very negatively about NACA at that time... Needless to say, I think the world of NACA right about now, and I would highly recommend them to anyone with good record keeping skills and lots of patience.
#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
- 58,929
- Votes |
- 39,986
- Posts
#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
I sold 1 of my OREO's to a naca buyer.. And then tried to work with Naca on others.. they do get deals done but as the post say its long frustrating process they are.. for me as the seller I was able to pay down the buyers interest rate to 1.5% so no money down.. As a seller Naca is contantly looking for sellers that will contribure to rate buy downs and closing cost.. I was all to happy to contribute to move one of my 200 OREO's and get basically full retail for it. But try as I might it was the only one I could ever get to go through the buyers just get frustrated and stop trying. And or the buyers just really can't get their personal stuff together and keep it together for a year that it takes.. But if you get one and have a seller contribute your getting a smoking deal. When I was at the closing I think the buyers payment was under 200 a month for a house that would rent for 800... his insurance was more than the mortgage.. B/C of past bad credit of course..
If Naca could ever get its act together they would be a game changer.. B Of A was the underlying lender and I think they probably use these for the CRI minimums.
Many other caveots with these. But I can tell when I first heard about it I thought dang I can sell all my reo's in a year or so and get made whole well not to be.
JLH
Yeah...My seller was contributing money originally, but then the property came in under value, and the seller took his cash off the table, and my realtor had to scramble to re-engineer a deal. We used CitiBank in my case, and I have to say they were pretty good about dealing with NACA's stiffling policies.
Hey everyone, just started the NACA process by attending a workshop this weekend. Will try to update as I learn more. So far, so good. Reading the forum post, looks like it'll be a long process...but it helps to know before-hand so that I am mentally prepared.
@Elisha Keller curious to hear how your NACA process has been?
My cousin bought a condo a couple of years and was financed through NACA. She had to have her financials scrutinized for a year and said NACA was slow but she has a 30 year fixed mortgage below 3%. So, I guess it is worth it.
One of the many issues with NACA is that they have their own people do the appraisals which are skewed and not reflective of the property's actual value. I just tried to go through NACA for a fourplex and I almost lost the deal due to an extremely low appraisal coming out almost 60k below asking price smh.... Yes I'm pissed...so FHA here I come!
@Jenna Stonecipher Can you comment more about why you chose not to go NACA? I'm glad to learn about both FHA & NACA programs. Here's what I'm gathering and please correct me if I'm wrong, as I don't have a lot of experience with either, although I just got pre-approved for FHA so I was heading that direction.
This is what I gathered from the forum...as a general overview
FHA
1) quicker & more organized
2) need 3.5% down payment
3) will need to find out the % of your mortgage rate which varies daily and by lender
4) Need to use FHA's own inspector
5) there is PMI
NACA
1) takes a long time to get approved
2) isn't as unorganized
3) you must use NACA's own overpriced (as someone said) contractors, appraisers, & inspectors
4) you have to volunteer 5x/ year
5) Must be your first home purchase
6) no down payment
7) no PMI
I chose not to go through NACA because I wanted to move quicker. They are very disorganized and tough to communicate with. I wanted to buy a REO as well, which can be tricky with NACA since they have many required repairs and require a 60-day closing in my market, which is unfavorable to banks. Here, NACA is backed by Bank of America, which also has a poor reputation in the real estate community. So, sellers view a NACA offer less favorably than a local bank--even if the terms were all the same.
What market are you in and are you working with a realtor? Rates are really good right now!
Originally posted by @Lauren Norman:
@Jenna Stonecipher Can you comment more about why you chose not to go NACA? I'm glad to learn about both FHA & NACA programs. Here's what I'm gathering and please correct me if I'm wrong, as I don't have a lot of experience with either, although I just got pre-approved for FHA so I was heading that direction.
This is what I gathered from the forum...as a general overview
FHA
1) quicker & more organized
2) need 3.5% down payment
3) will need to find out the % of your mortgage rate which varies daily and by lender
4) Need to use FHA's own inspector Not true in my market, although the appraiser will be looking for FHA required repairs
5) there is PMI Unless you make a hefty downpayment
NACA
1) takes a long time to get approved
2) isn't as unorganized And takes a long time to close on a contract, compared to regular lenders
3) you must use NACA's own overpriced (as someone said) contractors, appraisers, & inspectors NACA also has their own set of required repairs, which are more strict that normal FHA guidelines.
4) you have to volunteer 5x/ year
5) Must be your first home purchase Not true, you just can't currently be a homeowner.
6) no down payment Because it's rolled into your purchase price.
7) no PMI
@Jenna Stonecipher Thanks for those additions. Im in Brooklyn where there's a super high entry level to get started in REI but I've heard about some other folks who used NACA and were pleased.
I've asked a couple of real estate agents about that, but haven't been able to find an agent who knows/has experience with pre-foreclosures or REO in Brooklyn...so I'm still searching-if you know anyone in the NYC area please let me know!
Does anyone know how to fill out the NACA OTP. They need special verbiage and I had it stored on my computer and now can't find the file. ugghh
@Jay Hinrichs how did "buy down" the mortgage rate for the buyer? Did NACA walk you through this process?
#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
- 58,929
- Votes |
- 39,986
- Posts
#2 All Forums Contributor
- Real Estate Broker
- Lake Oswego OR Summerlin, NV
Originally posted by @Dave Ramirez:
@Jay Hinrichs how did "buy down" the mortgage rate for the buyer? Did NACA walk you through this process?
just call the local Naca office they will walk you through it.
I thought about the NACA process as well. This may be a small thing, but I didn't like the idea of being forced to volunteer 5x a year for the life of your loan without it being specified what volunteering or the duration of time you're expected to be there. No one wants to work 40+ hours a week then go into a different office to do clerical work on a Saturday. This would become quite burdensome and tiring for me personally, but everybody's different. And you can't rent the property out either. If you want to move you have to sell. It would be a great plan for someone that doesn't mind the volunteering or they have a spot where they want to live for the next 30 years but I'm just not at that point in my life.
I'd also be interesed in hearing more about these overpriced HAND contractors that you're forced to use. It sounds like because youre forced to use them, they have a monopoly and will overcharge you for the same work you could find someone else that's not HAND to do for less. Maybe an upside is HAND oversees these contractors so you wouldn't have to micromanage them.