patrick.net

How do you qualify for the NACA program if you already own a house? The website makes it seem that you have to be near foreclosure and having trouble paying your mortgage.

Nobody can qualify if they already have a mortgage on a home. This program is for first time home buyers. It is made to put renters in houses, with a ton of incentives(No downpayment, no PMI, no closing costs, buydown near 0, etc).

It's legit. Just a pretty slow process in getting qualified.

Well, that sucks. I'm sick of how all these programs only apply to first time buyers, but existing or repeat homeowners get squat.

With naca they will help you refinance, if you cant afford your mortgage. Its called their "Home save".

Mark D says

google "NACA scam" for more info.

Naca is not a scam, I know 2 people personally who has gone through the program running 2 years strong. Completely legit program.

ok i take it back after reading the complaints.

Kris says

bob2356, Def a serious post. I wouldn't need to pay the house off faster, as buying the 15 points down would practically yield no interest over the course of the loan... correct? This was not taking insurance into consideration. This was based on 4k a year in taxes, could be up to 6k I guess.

Correct, paying down early is a choice. I always pay down as fast as possible and only take 15 year mortgages. Not having a mortgage at all gives you a lot more flexibility later on. Toothfairy is correct, the first 6 years of your conventional mortgage would be pretty much all interest anyway so the 30k would be spent either way in that time frame.

E-man says

There are a lot of investment vehicles out there that pay 6% to 8% in yield and are very liquid.

Oh quit with the BS. Only investment property has this kind of yield!

E-man says

There are a lot of investment vehicles out there that pay 6% to 8% in yield and are very liquid.

name some

Not really looking to invest.

E-man you have a LOT higher risk tolerance than I have. Dividends over 4-5% average in the long haul with stable stock value are very rare. Getting a 15% dividend a couple years and then having the stock go to zero isn't a net winner. I'm totally out of the stock market anyway. It seems way too much a rigged game for the small investor these days.

A part of my investments are as a private money lender holding notes at 8% and 10%. It's one place that seems to make sense to invest today. If it goes bad the cost of foreclosing will kill any and all profits on the deal but you won't lose any principal. Even though I am very careful my assumption is someone is going to go bad so my true yield on this will be 5-6%.

Going 3% down with 33:1 leverage is gambling not investing. Any real estate deal that depends on inflation and appreciation not cash flow is damn risky. If you are into REIT paying 20% dividends you have balls of diamond.

Anyway, go for it. I don't want to be a pessimist but the world financial situation is the most volatile and unstable I've ever seen. Things are going to blow up. It has to happen, the situation in both Europe and the US is unsustainable. The only question is will it be a big bang or a series of smaller events. It's going to be really easy to get burned by things way out or your control for a long time.

Luckily I'm winding down at this point in life and have everything pretty well established. I have no need to play fast and loose, just keep everything well protected and grind out steady income.

I appreciate everyones insight, does anyone else have anything a different opinion that has not been covered already?

Kris,

You stated something about renting out this house in the future:

"Sface, I dont really invest, not really looking to. I'm okay with being locked in the home, doesn't mean I have to live there.(though I will) If I do decide to move(which I have been in the DC area for my entire life), I can rent it out."

I looked into NACA a while back. It doesn't seem like renting out a property with a NACA loan is possible. If I remember correctly, they mandate that you owner occupy the residence for the life of the loan (payoff, sell, refinance). This isn't necessarily a bad thing if you can be sure you will live in the house for the full 30 years. But if you use your $30K to buydown this mortgage and have to move (outgrow the house, must leave DC for a job, divorce, etc...) before the 30 years is up, you will have thrown your buydown money away when you sell (or refi in order to have the freedom to become a landlord). As I remember it, NACA puts a silent second or some other kind of lien on your house to ensure the owner occupancy is kept. If they find out you're renting out a house with their mortgage, I think they can call the first mortgage and activate the second lien. The more I think about it, the less sure I am of exactly what the enforcement/punishment mechanism is, but I'm pretty sure there is one. I'm sure you will research it. Let us know what you find.

Tony1971,

I am pretty sure you are correct. I know part of NACAs policy is that you are not "allowed" to rent the house out. I do plan on living in the house for a very long time, if not me, then someone in my family.(Still being paid by me) So I highly doubt I would rent it out. Even if I did, I have a hard time believing naca would find out. I will look into the punishment, to see exactly what they do. Good post though!

HousingWatcher says

Well, that sucks. I'm sick of how all these programs only apply to first time buyers, but existing or repeat homeowners get squat.

You're kidding, right?

any other different opinions?

Well, as stated in the first post:

"I like the idea of buying down because I wouldn't ever have to worry about paying off the house faster to save interest, The lowest mortgage payment possible based on the purchase price, and I am saving 75%+ Interest on the home over 30 years by taking a small hit of 30k when I am young.(That took about 2 years to save). 100k is alot of money, even if it is spread out 30 years."

Those 3 reasons pretty much sums up why I like the idea.

The only con I really see is being "locked" into the house. However the area I am looking to buy into is the area I plan on living for a very long time. It would only take me around 6 years to see my 30k in action. Even if I needed to sell after 6 years(which I know I wont) I would have paid that 30k over interest anyways, instead of buying down.

I think the pros clearly outweigh the cons.(in my case) Clearly I would wait to purchase at what I feel is the right time, as prices continue to decline. I dont think I will be purchasing for another 1-3 years.

^^Go F yourself.

Kris says

any other different opinions?

I tend to agree that it's an option that I wouldn't take. You are "all in" on your house -- committing to owning it for the long haul. A few other thoughts on why this would give me pause:

1. If you have a fixed rate loan, 3.625% (or whatever) is very low by historical standards. In 5? 10? years, you will still have that rate, and your 30k would be more valuable sitting in a CD (maybe). I understand that you aren't into investing, but what about bonds or CDs?

2. What if you lose your job, break your back, want to take a trip to cambodia...? That 30k is hard earned, hard saved money, and I would keep some of it on hand for the inevitable "life" situations that happen.

Kris says

In the end, my goal is to pay the least amount of interest as possible.

Then save up and pay cash for whatever you end up buying.

And I was paying more than your $700/month figure to live in Laurel as recently as 2003.

Let's fast forward this post a few years later with an update. I learned a lot over the years and my girl and I got an absolutely SICK deal on our first, and likely only home. Here are the stats:

0.0625% 30 year fixed rate through citi
No pmi
No closing costs
No "downpayment"
My credit score was under 600, girls was 725

Purchase price 405k. Bought the rate down to about 1.75% which costs 25k(lost to the bank) then put 22k into principle, the bank matched this dollar for dollar in further reducing the interest rate to 1/16th of 1%(0.0625%)

We're paying about 3k interest over the next 30 years. So 28k~ interest on a 405k home over 30 years with 25k of it already paid.

How INSANE is that? Naca is the best thing that ever happened to my growing family.