My NACA Journey: Phase 2

[Anonymous]

Sorry for the mangled mess for those who saw this before it got under control.

First phase here: http://ficoforums.myfico.com/t5/Mortgage-Loans/My-NACA-Journey-Beginnings/m-p/4151460

July 27, 2015

After more than a week back and forth, we finally have a fully executed contract. I ordered inspections for 7/29 which is awesome (and right on track with the NACA clear to close timeline) and even better, a week earlier than negotiated on my contract. My agent thought the sellers might not go for my shifting back the inspection deadlines but I was concerned that getting through HAND (even with no repairs needed) may be the most variable part of getting to close. I feel confident that we can hit a 30-day clear to closing though as the sellers wanted to close on 9/11 anyway, I’ve got a good buffer. If we do finish early, we can just get the buyer closing out of the way since the sellers are doing theirs elsewhere (which reminds me, I need to learn what exactly is different between the buyer closing and seller closing).

July 28, 2015

Emailed my MC to update her on what’s going on and she responded saying she needs all the contract paperwork in advance of the inspection (I was planning on hand delivering them). So, got all that together and submitted. She came back with a couple changes. Our seller did not complete the part of the initial contract indicating they submitted a counter. The language on the contract says sellers should not sign it if they are making a counter, so it makes sense they left that part incomplete. The other change was my signature. I forgot that I’m to sign next to my e-signature rather than on-top of it. I think this instruction should be added to the info sheet for buyers and their realtors. It’s easy to forget on your first go round.

July 29, 2015

Sellers still haven’t signed the amendment adding the closing language NACA requires. I’ll have my agent ping their agent to let them know they’re holding up processing my paperwork. I’m looking forward to the inspection today - well, the inspection finding nothing that requires repairs.

So, the inspection found a laundry list of things, most of them normal house maintenance type. In terms of what will likely trigger a repair list from HAND, there were a few electrical issues, but those are easy to handle (GFCI outlets, missing covers), a missing CO detector, siding that’s rotted, a leak in a sewer line, and potentially steps that need a railing. The sellers have also requested rent back so perhaps when we get to the inspection objection phase, I’ll offer free stay for the term they want in exchange for them to agree to the repairs. Based on estimates to repair siding, looks like total repair costs could come out to around $1000. In any case, how I proceed will depend on HAND and what looks like the best approach that doesn’t slow me down.

August 1, 2015

Got the email of the inspection report. Giving 72 hours for HAND plus another day or so, I’ll have the HAND repair list by Friday. I’m happy that I pushed my real estate agent to move that date back. She said 10 days was typical and was worried the sellers would push back. I suspected that would just barely be enough for me to get the list back from HAND. And wanted more time built into the contract to negotiate with the sellers if necessary.

From the report, the items I expect to be on the HAND list are addressing all the electrical items (missing CO detector, GFCI in kitchen, and a few other minor things), addressing the railings needed around exterior decks, leaky sewer line, and the rotting siding. The siding is the biggest cost item and so where I’m likely to see resistance from the sellers. Luckily, they’ve expressed a need to rent back for an extra week after closing providing a negotiation point that I can use to sway how they address my inspection objections.

[Anonymous]

Not sure what's going on, but my post shows up weird and I can't edit. . .

[ezdriver]

Try to delete and retype ... uging paragraphs if you did not with the original post. Post a reuest to moderator requesting help with deleting the post. Alternatively, just leave it along and just do another post.

[Anonymous]

Yay, I was able to login later and fix. 

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@ezdriver wrote:

Try to delete and retype ... uging paragraphs if you did not with the original post. Post a reuest to moderator requesting help with deleting the post. Alternatively, just leave it along and just do another post.

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August 5, 2015

Got the HAND repair list today. Had the siding, railing, sewer, and CO detector. Also got my title work. Looks like my realtor and I will have a lot to go over tomorrow.

August 8, 2015

Submitted repair list along with inspector report to the sellers. I'm asking for all NACA requested repairs in exchange for giving the sellers an additional week to move out. There are five items. Fix rotting siding, add railing to exterior stairs/decks, fix leak in sewer lire, add knockouts to electrical panel, and add a CO detector.

August 10, 2015

The sellers responded, offering to address the electrical items and sewer line and a credit for me to handle the railings and siding rot. I’m still quite concerned with how things may move with HAND though I’m willing to talk to available contractors to get a feel for their experience working with NACA.

So, I found a contractor who was able to take a look at the house today and give me an estimate. This isn’t for NACA, but instead so I have a true idea of the repair cost for negotiations. Once we figure out who is actually doing the repairs, if it’s me, I can get in NACA approved contractors for bids. Assuming I end up doing the repairs, after doing the math, it appears the best option for me is to take the credit as an additional amount at closing to buy down my interest rate and have NACA roll the costs into the loan. It essentially leaves me with a bit more cash after closing.

In doing the math, I came to the realization that with my purchase price, the difference between a rate of 1% on the 15 year loan and 0.5% (the rate I’ve been planning to buy down) is not much over the life of the loan if you factor in my buy down amount. Essentially, I could save about $3500 cash now in exchange for paying an additional $7000 in interest, which ends up being just an extra $3500 over the life of the loan. I think that’s worth it. When I first learned about the 15 year mortgage, I was so gung-ho to get the rate down as close to zero as possible. But with some perspective, it seems to make sense to target around 1%, especially if that frees up a lot of short term cash.

August 14, 2015

So, I’d told the sellers I wanted more for the repairs they didn’t want to do. After taking time to think about it, and requesting an extra day for inspection resolution, they responded that they’d handle all the repairs. We firmed up the language to stipulate the sellers would provide documentation as needed by NACA and inspection resolution is complete! Printed out, signed, scanned, and emailed to my MC - followed by bank activity print-outs since my last statement. We’re on to the bank app stage!

BTW, my MC has been really up on the deadlines, emailing me to check on things - though as it happens, me and the sellers have both executed amendments to shift out the deadlines for certain things. This afternoon I logged in to my web-file and saw the status has changed. It used to show something like “Property Selected”. Now, the status is blank but this indicates to me that changes are being made to my web-file. I’m looking forward to getting the appraisal. That, BOA review, and the inspection after seller repairs is all that’s between me and a clear to close!

[Anonymous]

August 17, 2015

My MC emailed me for address history information, then to let me know that approval to lock my loan should come in later today. Whoo hoo! Time to lock down that 1% rate or better if the starting rate is below 3% (all my calculations have assumed a starting interest rate on the 15yr loan of 3%).

So, I’ve needed to continue saving my payment shock. Also, this month, I’m attending a good friend’s wedding (which involves plane travel, accommodation for me and my gf, and wedding gifts), my gf and I are celebrating our 2-year anniversary, and other spending. So I still need to track those things in my budget and ensure my balances continue to grow by my payment shock, even though I’m qualified (and probably soon, rate locked). So, this requires planning (I’ve known about this since the start of June or earlier) to make purchases earlier and otherwise adjust spending so that I’m not crunched for available cash above my payment shock now.

It may seem wise to save up money and then make a lump payment all at once, but that’s not necessarily the case, particularly if doing so wipes out any buffer you would have above your payment shock. Not only will that cause you to violate the pattern of savings that NACA requires, but it puts you just one accidentally early scheduled payment or unexpected need to purchase new tires from having to dip into your payment shock and reset the 3 month minimum clock on your savings. This method of savings is a bad idea, even if you did have a mortgage or were not otherwise saving payment shock. Lump sum payments should not wipe out any savings buffer you have. If you have a cluster of large payments that all occur around the same time (beyond your normal monthly obligations), the smart thing to do is to rearrange those payments so that you aren’t losing a huge amount of cash all at once or to start paying it down in advance so should something unexpected happen, you will still have a buffer. Also, planning out such spending means you might defer non-essentially purchases to take place after the big event.

Using a budget (an actual spreadsheet or other tool where you track your spending and balances in the same place, both planned and unplanned) is essential. My budget shows me up to a year out, what I plan on spending and how much I should have in my savings. Also, an especially for NACA. If your payment shock is X, plan on actually saving X + $100 or X + $200. When things come up, you’d have the security of being able to drawn down a bit extra. If your budget is extremely tight, you will have a lot of stress trying to account for every single penny and need to exercise strict control to ensure all spending is planned ahead of time.

Another way to buffer spending (for example, I may have a big expense due tomorrow and my next paycheck [a couple weeks away and in the next month] will cover it) is judicious use of credit - especially if you're still a couple months out from qualification or your bank app. I've put a couple things on my credit card and then paid it off with two smaller payments over the following 30 days rather than risk not meeting my payment shock. The $10 or so I paid in interest was well worth the security. Still, you should be careful here. For example, when I qualified, I had a balance of X over 3 credit accounts and a combined monthly payment of Y. I'd paid that off after I qualified and when using my credit as a buffer, I tried to keep the balance close to X so that were I not able to make more than the minimum payments for some reason, when underwriting reviews my credit, the worst case is that they see I'm pretty much at the same situation under which I was qualified. This may also be a reason to not pay off your credit cards prior to qualification unless you have to (to either decrease your DTI or because required by underwriting) even if you can. Qualify, then pay it off and give yourself a credit buffer for emergencies. If I knew this 5 months ago, I'd have about $5k more in available cash now.

August 18, 2015

Looked at my web-file and it says credit access approved. I suppose it makes sense since I have an appointment to more. to complete the loan application.

August 19, 2015

Went in to complete the loan app and ran into some issues with the form calculation of buydown amounts. For some reason, it would use the 30 year loan rates instead of the 15 year loan. Then, when it finally accepted the 15 year loan amount, it didn’t allow printing out of documents for me to sign. It also seemed to have an incorrectly calculated number of points (based on my buydown amount). My MC will prep the docs for me to complete once ready which should happen this week.

There was also a question about funds for buydown. If you factor the amount from my earnest money not going to prepaids, together with what’s in my savings I have enough. However, my MC was concerned whether the underwriters will accept that or need to see the full amount in my account. As I was planning on taking money from my IRA anyway (but was waiting until I knew how much - which I learned today), I ordered a check overnighted to me so that should be taken care of this week if it’s an issue as well.

[Anonymous]

August 24, 2015

So today is when we completed the bank app. My web-file status now reads “Mortgage Application at Lender”. It was pretty straightforward. The question now, which hopefully I’ll have an answer from my MC tomorrow is on the appraisal. Currently, my contract has the appraisal deadline at 8/26 and objection 8/31. I’ve instructed my realtor to submit an amendment to push out the appraisal deadline to 8/31 and objection to 9/1. Given the time now, that amendment won’t go out until tomorrow morning (the seller’s agency is only 9-5) so perhaps we’d have more exact details by then. If not, I think that may be enough time given what I’ve been told about the process for Denver.

That said, there is a good side to the delay - I got a lower rate! Based on the rate 8/24, I needed to bring in about $10,500 (on top of the seller contribution) to get the rate down to 1%. Today, with a $9600 buy down from me, the rate is 0.85%. This also gives me some wiggle room should things not appraise - I could shift some seller concession money to make up the difference and still hit a 1% rate. It’s good to be locked!

I also got homeowners insurance today. Not really having info for the “bill my mortgage company” option, I just opted to take the 10 payment option. I didn’t do that much comparison shopping but my auto insurance provider ended up giving me the best quote (even excluding their bundled policy discount). And, I can continue shopping around and make a change later.

August 25, 2015

Still nothing back regarding the appraisal. My agent got the appraisal deadline and objection pushed back to 9/2 and 9/4 which hopefully gives enough time. We’re still waiting to hear back on when the repairs will be complete so we can schedule the re-inspection.

August 28, 2015

Whoo, today has been a whirlwind. Logged on to my web-file to see a flurry of activity between BoA and NACA and a couple items that needed my input to address. I put together the relevant documents, emailed to my MC and my web-file. She called a few hours later (I saw this first thing in the morning) to discuss some of the lender conditions. I also learned that the appraiser has already been to the house and will be uploading the report by 8/31. Likely be a little low, and I’ll try to have the sellers eat half of the difference. Still, with the rate that I’m locked to, I have buffer room which is nice.

I contacted the inspector yesterday but still haven’t gotten a firm answer on when he’ll be able to go back out for re-inspection. Hopefully we can get that handled next week - which gives the week of time that NACA needs prior to closing.

Anyway, lesson from today: be proactive about looking at your web-file and prepping documents needed. Your MC is busy with lots of stuff (there are close to 10 open/pending conditions. . .at the moment on my file and only 2 of them could I immediately address) and may not get around to contacting you until he/she has time. I think I got my call early in the day because I sent that email and so provided an opportunity for my MC to deal with those items and interact with me. It took me time to pull out documents from Dropbox, compose a LOE, print, sign and date, scan, and email this - all while doing my day job. If I waited for a call or email which may have arrived later today, I probably would have completed that near the end of the day, which means it likely would not have been submitted till Monday.

September 1, 2015

Still no appraisal. This is a bit strange as my MC talked to the appraiser on the 28th and the appraiser indicated she’d have it submitted by 8/31. My MC said she’d tried contacting the appraiser throughout the day to get an update but nothing by the end of the day. Looking at my web-file, I see that most of the conditions have now been cleared, only 2 currently remaining - the appraisal and better copy of contract. Re-inspection is tomorrow afternoon. Hopefully, that all goes fine with no further work required. We’ve still not gotten the invoices from the seller’s agent. Hopefully that will be taken care of tomorrow as well. NACA wants the invoice(s) in your web-file before the re-inspection is submitted.

September 2, 2015

Re-inspection done, invoices submitted to my web-file and MC. We had some homeowner’s insurance stuff to address today but nothing major (putting BoA as the loss payee) and adding my middle initial to my name. Still waiting on the appraisal. . . I suspect we will need another extension. I don’t like being the party holding things up. . .