Let me start off by saying I am very happy that I completed the NACA process. It was worth the stress and the years removed from my life (exaggerating).
From Naca’s Website
The Neighborhood Assistance Corporation of America (“NACA”) is a non-profit, community advocacy and homeownership organization. NACA’s primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership. NACA has made the dream of homeownership a reality for thousands of working people by counseling them honestly and effectively, enabling even those with poor credit to purchase a home or modify their predatory loan with far better terms than those provided even in the prime market.
Part I: The Workshop
I knew it was time to purchase a home because my rent increased by $80 per month. I owed thousands in income tax (not exaggerating); long story. My ex-manager told me about the Naca program. After a little research, I decided against it due to the horror stories. I put my house dreams to the side due to not have 20% to down payment. I refused to pay PMI. FHA required PMI. NOPE!!!
One day in late-Feb 2017, I woke up and said I am over this apartment life.
I went to Naca.com to find a workshop. It is the first step of the process. In Charlotte, NC the workshops were full for months. I decided to look in cities around Charlotte. I found a workshop Blythewood, SC.
I attended the workshop on March 6, 2017. The workshop was 4 long hours. They go over payment shock, the benefits of Naca, credit, and the process. A couple of Naca members talk about their success with Naca. It was refreshing to hear after reading countless horror stories.
The Naca representative asked if anyone had everything required and ready to start. I had all of my stuff in order; therefore, I was placed on the accelerated path.
Accelerated path meant I would meet with my counselor within the next two week oppose to 2-3 months.
My Take Aways
- Payment Shock – The difference between your current rent and desired mortgage payment. The difference of the two Must be saved monthly. They need to see at least three months of payment shock prior to being approved. If your desired mortgage is equal or less than monthly rent, then don’t work about PSS.
Example: My rent was 990. My desired mortgage was $1200. I had to save $210 per month.
- Rental Documentation – A copy of your lease. If you pay rent it must be document for at least twelve months. Twenty four months of rental history is needed. If you are paying a relative/friend, then pay them by check or money order. DOCUMENTATION is real. Your friend writing a letter is not sufficient. They have work arounds for cash payments but it is not worth the trouble.
- Late Payment/Charge Offs/Collections, etc. – If it’s within the last 24 months, then pay it. If over 24 months, then discuss it with your counselor before paying.
- Tax Liens/Bills – Pay it. No way around it. Pay it.
- Savings – You need money saved. You have to pay for your credit report, HOA (if apply), inspections, etc. Naca wants to see the money in your account.
- Credit to Debit Ratio – The amount of credit you owe will be a determining factor of how much you are approved. DO NOT APPLY FOR ANY CREDIT… NOTHING. Do not use your credit cards once you are approved. IMPORTANT
- Interest Buy Down – You have the option to buy down interest. Pay 1% of the loan amount and the loan will be reduced by .25%. Google interest buy down. I will discuss it several times in this series.
- Documentation – You will need three months of all of your pay stubs, bills, bank statements. If the bank account appears on your pay stubs you must provide the statements. If money goes directly into anyone else’s account, you have two options: cancel the direct deposit to that account or be have full access to print statements from that account at any given time.
- Tax Statements – You will need two years of income tax statements and transcripts. You will have to order your transcripts form the IRS. The transcript is to prevent fraud.
- Identification – State ID or Passport, and SSN card
- Credit Report– You will pay Naca for a copy of your credit report.
- Letters: Be prepared to explain any discrepancy on your credit report. It can be anything name, address, literally anything.
Part II coming soon.