The Official NACA mortgage thread

[Anonymous]

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@greg_the_egg wrote:
Seems like a decent agent should be able to negotiate the 3 percent regardless of what you'll be using it for. It shouldn't matter if the money is for a rate buy-down, closing costs or new lawnmower. Ultimately though, it comes down to if the seller believes that they're also getting the best deal for them. Maybe they feel like they can get better than 97 percent and they're willing to wait.

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I totally agree. My agent is doing the bare minimum. All she did was send me the counteroffer with no recommendations. Just said please review.  She's not going to fight or negotiate further.

[Anonymous]

Hello everyone,

I plan on pursuing the NACA program this year, but I’m concerned about how my “rental history” will be verified if I technically never rented before. I have been staying with my parents and was not required to pay rent. However, I do contribute a few hundred dollars each month to help on the bills. There was never a set amount agreed on for me to give, and some months I’m not asked to contribute at all. Otherwise, I do have plenty of money saved up and have been saving at least $1500 each month for the past year. I virtually have no debt since I was planning on applying for a conventional loan this spring, until I learned about this program. Will I be able to get around the rental history?

thanks,

Stephanie 

[KBincali]

Hi Stephanie,

In my experience, there is no getting around anything with NACA. The trick is understanding why something is being requested and how best to meet that need. Every time a requirement isn't going to be met in the conventional way it just means it will take more time and effort, not that it will exclude you.

The rental requirement is there to make sure you are financially able to maintain a mortgage, as well as have the personal habits to make the payments on time. Even when someone has a normal rental history, they need to show they can save the difference between their rent and the mortgage payment on the house price they'd like to go for. They call it a "shock" payment. If they determine according to your monthly income that you could afford a $1500 mortgage payment, and that is in fact the value of home you want to buy, and your rent has been $1000, they are going to tell you to start saving an additional $500 a month. Unfortunately, I don't remember how long a period of time that is off hand. I want to think it was 6 months (?), but not positive. You should be able to find that answer on the NACA website, or one of the other people here may know.

If you have the documented history of $1500 a month in savings for a year, that is a good thing. Is your desired mortgage less than $1500? It will still require letters of explanation for the cash deposits. In my job, I get and deposit a lot of cash. I had to write A LOT of letters!

In my case, I wanted a mortgage less than what I was paying in rent, so didn't need a shock payment. My mortgage payment even with taxes and insurance is still $400 less than I paid in rent! If you are able to show that $1500 in savings over the period they require, and your desired mortgage payment is less than that, you may not need anything else. However, they may ask for additional time, and they will crawl through your bank accounts asking what every transaction was for, so be ready for that.

It will just take time and patience.

Good luck!

[Anonymous]

Hi KBincali and thanks for the quick reply! I did eventually read through one of the workbooks online and it says if someone doesn’t pay rent, they have to show 6 months of expected mortgage savings. This I assume is called the payment shock. Hopefully they take my previous bank history to date and not make me wait an additional 6 months to qualify.

[Anonymous]

Hello piggyo4,

That $1500 per month you have been saving may wind up serving you very well. The only issue may be how consistent it has been.

You will indeed need to have saved the full mortgage payment each and every month for a minimum of six months before you will be able to be NACA Qualified.  The trick is that it must be at least the full amount of the mortage payment each month without fail, not an average over the six month period.  The reason being that the bank will never accept a partial mortgage payment.  Anything less than the full payment each month will be rejected and is the same as no payment at all.  Therefore you have to show that you can in fact make the full mortgage payment each month by saving the full Payment Shock amount each month. (In your case that's 100%, the full mortgage payment amount.)

So if you desired mortgage payment is $1500 or less and you have saved that consistently for six months or more, you may actually be in very good shape! Your NACA counselor will review your bank statements and advise you on your options and how to proceed.

Tim Trumble

Online Operations, NACA

[kpearce88]

Hello, 

New to the forums and planning on buying by new February. Started reading and researching on NACA. Confused about something. I read you need 12 months of good rental history and no late fees(past 30 days). I found a copy of the workbook and there was a form that requested 24 months. Issue is my prior 12 months were not so good. Main reason I moved. Would this hurt me?

[KBincali]

Hi kpearce88,

I am aware that NACA requirements have changed a number of times over the years, but I just closed in Dec. and didn't see any form for 24 months of rental history. Did you happen to find an old workbook? In fact the only 2 year requirement came up for employment history, though there are differences for the self-employed.

Regardless of any requirements, there really isn't anything with NACA that can hurt you, as in keeping you from buying, It's just that it will take either more time or work to overcome. You definately can't be in a hurry with this program. Good luck.

[kpearce88]

Congratulations KBincali! It very possibly could be an old workbook. I have nothing but time since I want to move in Feb 2019. My issue now is trying to figure when to apply. Don’t want to do it too early

[Anonymous]

Hello kpearce88,

It depends on just how not-so-good those 12 months were.  Long story short, we look a the past 24 months, with a focus on the past 12 months. One late during that first twelve months and nothing bad since is generally not going to be a problem.  Or if it was a situation that was completely beyond your control, such as a serious illness. In other words, it's going to depend on how bad the situation was and why.

However, that's one of the major reason for the counseling appointment.  It's not just taking a loan application. We conduct a review of your financial picture and advise you on what, if anything, needs to be done to improve your situatiuon to show that you are ready for home ownership. So no matter what, keep your appointment with your counselor.  He or she will be the one to determine exactly where you stand and how to proceed toward becoming a homeowner.

Tim Trumble

Online Operations, NACA

[Anonymous]

Hello kpearce88,

There's no such thing as starting too early in the NACA program.  Go ahead and get going no matter what!

Tim Trumble 

Online Operations,NACA

ttrumble@naca.com