I plan to apply for a mortgage through the NACA program in October of this year and this is my current situation.
I will need $11759 to buy my interest rate down to 0.0625% on a 15 year mortgage (I already have my MRF and payment shock covered and theres no downpayment or closing cost). My only debt is a car loan with a $8251.22 balance with a monthly payment of $351.34
OPTION 1 : Pay off car loan by October, apply for $5000 in downpayment assistance and pray like nobodys business the seller will meet me half way with the balance
OPTION 2 : Pay down car loan to 10 remaining payments ($3513.40) Save $6000 for buydown and apply for $5000 DPA
OPTION 3: Save $11759 for buydown continue with regular car payment (DTI will be tight, very tight)
OPTION 4: ????????THROW SOMETHING AT ME!!!!
Option 1 would be off my list. Relying on the seller to reduce his profit would stress me out to no end.
I think I'd go with Option 2 unless one of our resident financial geniuses has a better idea.
Do you have to buy down the loan that far in order to qualify? Isn't there options in between or is the car loan making it mandatory that you buy it down to less than 1%
How much are you going to save over the life of the loan with the buydown? Do you need to buy it down the full .0625%? Are you speculating on the DTI numbers, or has your lender confirmed you wont make it with the full car payment? Have you thought about refinancing the car (and paying it off as quickly as possible after you close)?
Doesn't NACA have a income limitation? Do you meet that limitation with the monthly bonuses? I ask because I really am not familiar with the NACA program.
My total interest on a $200000 loan for 15 years would be less then $900. I don't have to buy down that much but given the opportunity I think it's smart. Dti is based off base salary not including bonus. I think of my bonuses as just that a bonus and don't use it to budget. The lender would approve me with car payment but again I could get more house without it. My parents are aging and I want to make sure I will have enough room for them once the tines comes, also I plan on adopting. Refinancing the car is not an option. I don't want the credit pulls.
Are you sure? That would be a 0.06% interest rate.
Bonuses can sometimes be included as income depending on your situation. I think you should ask your LO how much, if any, monthly bonus can be used in your qualifying income.
After that, it is truly up to you whether you want to either A) pay off/down the car to afford more house or B) use the money to buy down a lower interest but potentially not afford as much house. You can always look into DAP too, but those are nowhere near guaranteed.
Best of luck!