NT Homeowners and Future Homeowners Thread

[mel610]

At some point in life the allure of home ownership engulfs most of us and the pursuit to own a property becomes a goal that we work towards. This has been something that I have been working on for almost 2 years and I wanted to share the helpful information I have received during my journey.

Before I started seriously pursuing home ownership I was informed of a program called NACA which is a nonprofit where you go through mortgage counseling and you are assigned a realtor. They work with you through the whole process for free and on top of that they pay your closing costs, no down payment and no PMI (PMI is mortgage insurance that you pay whenever you buy a house and put less than 20% down)

I went to one of their workshops and ultimately started the program. After the workshop you get assigned a mortgage counselor and have an intake appointment. At this appointment you bring all of your financial information, work info, most recent tax info + any other vital information. From there you select a mortgage amount that you are comfortable paying per month and if your finances are in order you need to show that you can save that selected mortgage amount for 3 months. If you live in an apartment you would only need to save the difference between what you pay in rent and what you would want your mortgage to be. So at the end of these 3 months you become qualified and you can start looking at houses with your realtor. From here on the process becomes pretty typical, you find a house, put in an offer and close. No down payment, no closing costs and if the seller offers closing assistance then you can use that to buy down your interest rate. That is the program in a nutshell.

My personal experience has not been so smooth. After getting qualified under the program I went under contract on a house last November. Basically got through the whole process of having it inspected, I brought in contractors for estimates to do some upgrades, had it appraised and was at the final step which is closing. The house appraised for 35k less than the listed price so my realtor and I asked the seller (which was Fannie Mae because it was a foreclosure) to lower the price by that much. They said that they would but months went by and we didn't hear from them. Finally they decided to contact my realtor and informed us that they were not going to lower the price and if I wanted to go forward then I would basically have to put up the difference in cash (35k). I walked away....

That was a heartbreaking experience to get so far in the process. I was mentally moved in to that house and to have them pull a move like that was very discouraging. I had to start from scratch but ended up finding a bigger and better house. I put in an offer for the house and it was accepted however it is a short sale and I am awaiting the approval from the sellers bank. Does anyone have any experience with the short sale process? I would love to hear the experiences of others.

Anyone looking to buy a house in the future I highly suggest looking into the NACA program. They have offices throughout the US in almost every major city. The process is a little tedious and requires some patience but I think it is definitely worth it.

Sorry for the long read. *Cues the did not read gifs*

 

[jesusshuttlesworth34]

My one tidbit of advice is....just because you get pre-approved for a $500,000 loan, does not mean you have to buy a $500,000 house. I see people that buy these massive homes and have 3 or 4 empty rooms in the house and can barely keep up with the mortgage.


If you are a single young man with a decent job....buy a house, rent out one or two of the rooms to cover the majority of the cost of your mortgage and get your feet wet in property management.

 

[mel610]

My one tidbit of advice is....just because you get pre-approved for a $500,000 loan, does not mean you have to buy a $500,000 house. I see people that buy these massive homes and have 3 or 4 empty rooms in the house and can barely keep up with the mortgage.
If you are a single young man with a decent job....buy a house, rent out one or two of the rooms to cover the majority of the cost of your mortgage and get your feet wet in property management.

Most def!. I am actually going through the process with me fiance so with our combined income we got approved for a lot more than what we are spending. She wants big, shiny and new but I had to bring her down to earth a bit and let her know that just because we can technically afford to go higher, that doesn't mean we should. Not point of having a huge house if most of it remains empty.

 

[ohmygosher]

no down payment

That's a BAD thing. The more you can put down on the down payment, the better interest you'll get, and your monthly payments come down. 

 

[thenewjs23]

My one tidbit of advice is....just because you get pre-approved for a $500,000 loan, does not mean you have to buy a $500,000 house. I see people that buy these massive homes and have 3 or 4 empty rooms in the house and can barely keep up with the mortgage.
If you are a single young man with a decent job....buy a house, rent out one or two of the rooms to cover the majority of the cost of your mortgage and get your feet wet in property management.

This man knows.

 

[mel610]

That's a BAD thing. The more you can put down on the down payment, the better interest you'll get, and your monthly payments come down. 

Well technically there is no REQUIRED down payment so you can put down as much as you want which ultimately lowers the mortgage. I forgot to mention that the program has a flat interest rate so no matter how bad your credit score is everyone gets the same rate and it is usually slightly lower than the National average.

 

[jesusshuttlesworth34]

That's a BAD thing. The more you can put down on the down payment, the better interest you'll get, and your monthly payments come down. 

Yeah you always want to put down at least a little something. I think when buying cars/houses, people strive to put down 20 %. Not everyone has 30 - 60 K they can just throwdown on a house though, but even a couple grand is better than ZERO.

 

[thenewjs23]

That's a BAD thing. The more you can put down on the down payment, the better interest you'll get, and your monthly payments come down. 

Not it all cases, if your good and like to watch your money. You can make 20% work earn more than your savings on your monthly note.

You have to be proactive though. Its your money, so that should not be hard.

If you are lazy and just like throwing money at peps. Then I would suggest a downpayment also.

 

[rarefiedair24]

 Does anyone have any experience with the short sale process? I would love to hear the experiences of others.
 

My wife and I are new homeowners.. Actually, it'll be 4 years in Oct. so not sure we can still call ourselves "new" homeowners.. But we also looked at foreclosures because they were just being offered at crazy good deals... we must have looked at about 5 different houses before we found our home.. 

We both sat down and made a list of all the things we wanted in a home and things that we "would" like in a home but don't necessarily have to have... Of course my wife put down a pool and I put down a garage... well sure enough we both got our "would likes".  

As far as short sales not because of price or quality of homes offered but we purposely stayed away from those because a short sale is the opposite of the name, a short sale just kind of drags on and on between the bank and the current owner and we were on a 4month timeframe to where our rental lease was up and we wanted to be in something..

But in the end when you guys are in a home there's no better feeling and sense of accomplishment.  But be prepared to have your free time really cut down because there's always something that needs to be done or fixed..  GL!

 

[jjs07]

Yeah you always want to put down at least a little something. I think when buying cars/houses, people strive to put down 20 %. Not everyone has 30 - 60 K they can just throwdown on a house though, but even a couple grand is better than ZERO.

Exactly.

Putting nothing down could set dude up for failure down the road.  This is a prime example of how people got in over their heads due to the banks approving them for loans that would never be paid off.  Foreclosures, etc. 

JS34 is completely right...putting a little bit down is better than nothing. 

Owning a home isn't easy.  It's not like a rental community where you have a maintenance staff who does repairs and things of that nature.  You come out of pocket for EVERYTHING. 

I bought my house back in 2006, and before 2007 came around, I had spent well over 10k in repairs and other cosmetic stuff.  Skip ahead to 2012, and I can't even tell you the amount of money I've put into my crib. 

It's nice being a home owner, but like I said....it isn't easy. 

I really believe you need to think this through carefully. 

 

[jesusshuttlesworth34]

My wife and I are new homeowners.. Actually, it'll be 4 years in Oct. so not sure we can still call ourselves "new" homeowners.. But we also looked at foreclosures because they were just being offered at crazy good deals... we must have looked at about 5 different houses before we found our home.. 

We both sat down and made a list of all the things we wanted in a home and things that we "would" like in a home but don't necessarily have to have... Of course my wife put down a pool and I put down a garage... well sure enough we both got our "would likes".  

As far as short sales not because of price or quality of homes offered but we purposely stayed away from those because a short sale is the opposite of the name, a short sale just kind of drags on and on between the bank and the current owner and we were on a 4month timeframe to where our rental lease was up and we wanted to be in something..

But in the end when you guys are in a home there's no better feeling and sense of accomplishment.  But be prepared to have your free time really cut down because there's always something that needs to be done or fixed..  GL!

Yessir....something always needs to be fixed or maintained. Painting, deck staining, landscaping, you name it.....it really becomes a time vs money thing, as even though it feels great to do it yourself, you may want to outsource certain things if your money is good and you want to enjoy your free time.

 

[thewestcoast]

Exactly.

Putting nothing down could set dude up for failure down the road.  This is a prime example of how people got in over their heads due to the banks approving them for loans that would never be paid off.  Foreclosures, etc. 

JS34 is completely right...putting a little bit down is better than nothing. 

Owning a home isn't easy.  It's not like a rental community where you have a maintenance staff who does repairs and things of that nature.  You come out of pocket for EVERYTHING. 

I bought my house back in 2006, and before 2007 came around, I had spent well over 10k in repairs and other cosmetic stuff.  Skip ahead to 2012, and I can't even tell you the amount of money I've put into my crib. 

It's nice being a home owner, but like I said....it isn't easy. 

I really believe you need to think this through carefully. 

i'm with you..it's the most overrated goal next to college. I only say this cause I have both and paying for upkeep and taxes sucks.

Youre responsible for everything..and I mean everything...that city planted tree with roots infiltrating your piping cause leaks and bursts? Home owner gotta pay that.

My advice..rent a home.

 

[rarefiedair24]

Yessir....something always needs to be fixed or maintained. Painting, deck staining, landscaping, you name it.....it really becomes a time vs money thing, as even though it feels great to do it yourself, you may want to outsource certain things if your money is good and you want to enjoy your free time.

Without a doubt, but for ex. I always said if I ever had a house with a pool I'm just going to pay someone to clean it and maintain it, well long story short, going rate down here for pool service is $75 a month.... HELL NO.. you know I'm doing it myself! invested in an automatic pool cleaner and do the chemicals on a weekly basis for $10 a week.. gotta $ave where you can! 

 

[mel610]

Your are counseled throughout the program and your finances are nitpicked because of how the current market is. So when I say there is no down payment it ultimately takes away from how much you can spend. The whole point of the mortgage counseling is to show you are able to make the payments and see how much you can truly afford so that you don't end up foreclosing in the future. In my case I am getting 6% from the seller in closing assistance which is about $19,000 and I am using that to buy down my interest rate. On top of that I am putting down 10k for buying down the rate which is locked in at 1.10 % if everything goes well.

 

[crcballer55]

That's a BAD thing. The more you can put down on the down payment, the better interest you'll get, and your monthly payments come down. 

Well technically there is no REQUIRED down payment so you can put down as much as you want which ultimately lowers the mortgage. I forgot to mention that the program has a flat interest rate so no matter how bad your credit score is everyone gets the same rate and it is usually slightly lower than the National average.

In short, THIS is why much of the housing situation is as it is now. People with bad credit should not be buying a house and anyone who is not able to put down at least 5-10% should not be buying at that moment either. Too many people were buying a home because they didn't have to put anything down and didn't have any skin in the game and as a result, were willing to just walk away from their home and lower surrounding home values by foreclosing. I'm sorry if I sound mean on that, but I spent almost 3 years in evictions and heard the same story over and over.

NACA, as far as I'm concerned has done more harm by giving people false hope than they have benefited them by helping people stay in their homes. Just remember, because they're free, you're getting what you pay for. When you're the buyer, your realtor is free anyways so that shouldn't be a deciding factor.

FYI... if they're giving below market rates to people with bad credit and no down payment, chances are, it's a loan you don't want. I'm going to bet that it's either an ARM (which WILL go up from here when it adjusts) or some other exotic product.

 

[squatchnt]

I worked with NACA in the past on a loan modification. Not a bad company imo. One thing I didn't see mentioned here, not sure if they still do it, but you pay a monthly fee for the first 5 or 10 years and you can get NACA to cover mortgae payments in case of a hardship. Theres rules and limits but good imo.

As far as no money down, it's good if you have done all your homework. Unlike the car analogy, your house should increase in value whereas a car will take 3 times the amount of time to increase in value. If you're maxing out, approved for 500k and spending 500k, unless it's a million dollar house I wouldn't do it. If you getting a great deal, consider it. That down payment can work for you in the meantime.

Lastly, unless you are truly settled and have LOTS of spare time on your hands rethink it. Home upkeep is a ***** if you DIY. Lots of time as well as money.  

 

[beh235]

Finally, a thread that delivers. Mel610, thanks for the info, instead of bookmarking it, I'm going to write it down and do some researching myself. Much appreciated bro

 

[iamyourfather]

thanks im in the process and had no idea about this program.

 

[BloodxBone]

For those searching, Listingbook was very useful for me in my search. You just put in your search criteria and you get daily reports sent to your email on new property listings.

I was also guilty of assuming everything would work out with the first offer I put in. All in all, it took 3 offers on 3 different houses before I had a home. I would definitely suggest you keep an eye out on new listings while going through the early stages of escrow; you never know.

 

[mel610]

In short, THIS is why much of the housing situation is as it is now. People with bad credit should not be buying a house and anyone who is not able to put down at least 5-10% should not be buying at that moment either. Too many people were buying a home because they didn't have to put anything down and didn't have any skin in the game and as a result, were willing to just walk away from their home and lower surrounding home values by foreclosing. I'm sorry if I sound mean on that, but I spent almost 3 years in evictions and heard the same story over and over.

NACA, as far as I'm concerned has done more harm by giving people false hope than they have benefited them by helping people stay in their homes. Just remember, because they're free, you're getting what you pay for. When you're the buyer, your realtor is free anyways so that shouldn't be a deciding factor.

FYI... if they're giving below market rates to people with bad credit and no down payment, chances are, it's a loan you don't want. I'm going to bet that it's either an ARM (which WILL go up from here when it adjusts) or some other exotic product.

Have you been through the program or have had any experience with it. It is not like they are just giving houses away to anyone. You can only get qualified if your finances are on point and if not they help work with you to get to where you need to be. Their qualifications are more strict than going through a traditional bank. EVERY loan is a 30 year fixed rate loan that will not go up so my 1.10% interest rate is locked in until I either sell the house or pay it off.

 

[jjs07]

I just don't get how someone can qualify for a 1.10% interest rate with bad/no credit and also w/o having to put any money down.  Maybe I'm not understanding the program correctly, but something isn't adding up.  At all. 

 

[mel610]

First off, I have excellent credit. Where you guys are pulling this bad credit stuff from is puzzling. I stated that everyone gets the same rate if you qualify regardless... I am getting a 1.10% rate because at the time I did my mortgage app the NACA rate was 3.375% (today it is 3.5%). On top of that I get 6% for closing assistance from the seller. Since there are no closing costs I am using that to buy down the interest rate (every 1% of the mortgage amount I put down drops the rate .25%) and 10k of my own money. You can buy down the rate (points) with traditional loans also.

 

[oidreez]

Lurking

 

[richiecotite]

I just don't get how someone can qualify for a 1.10% interest rate with bad/no credit and also w/o having to put any money down.  Maybe I'm not understanding the program correctly, but something isn't adding up.  At all. 

I don't see how anyone is getting a 1.10% interest rate.

We just bought in March. First home (short sale) fell through, so when we found (and both liked) our current house we jumped on it. Our house is much more expensive than the first spot, but the first spot had HOA and maintenence fees around 300 per month, as opposed to 300 per quarter now.

Luckily, my credit is pretty solid (mid 700's) my wifes is pretty decent (low 700's) and we got pretty lucky with an interest rate of 3.75%. We also put 10% down and covered closing costs. Our area was one of the least hard hit by the recession, and home prices are still ridiculous.

Like a few have said, you better factor in that water pump that goes out, or the new fridge you'll need, as something always goes wrong when you buy a house as opposed to having it built. Also, make sure you know about HOA fees, maintenance fees, etc.

 

[the nomad]

Think I'm buying land, within Brooklyn and Manhattan and building a new home to my specifications. A lot cheaper than buying pre-owned buildings and houses here in New York.
No one never really looks into BUILDING brand new in New York.