On Thursday I wrote a thread about NACA. I am trying to buy my first Condo. A friend of mine suggested them. The first step is to go to their informational meeting. And so this post is about my visit there.
More beneath the fold.
At the outset it seems like I am not NACA's "core customer". I make relatively decently good money. My credit scores are very good. I have a stable job. I have a 401K and IRA. The problem for me is that I live in a very expensive city and I was out of work a few years ago. I have debts that I am paying off slowly.
So anyway, though, the meeting started. The genetleman talked about NACA and showed a video. Basically it seems like NACA argues against predatory lending and advocates primarily for poor people and minorities in the inner city. Most of the attendees were minorities. The video showed basically NACA protesting against big banks and showing pictures of preachers in churches. They were claiming how they helped people escape predatory mortgages with subprime rates.
NACA's "core customer" seems to be a person in the working poor with low to moderate incomes who has little understanding of the home ownership process. They seem geared toward the person who has had bad credit, but could be a stable homeowner if he/she received the right type of help and counseling. Someone like me--a working professional with an advanced degree, some retirement savings, and a decent understanding of financial matters--probably doesn''t fit their profile. Yet, though, I am grateful that the program has no salary cutoff.
A lot of the "information" that the gentleman explained was redundant for me. The man talked about credit scores and debt. He talked about having to have money available for "payment shock". What I found, though, surprising was that contributions to retirement plans at work count as "payment shock savings". So too does holding assets in IRA's. The first step to be approved for financing through NACA is to develop a spending plan and what you can realistically afford.
In discussing "payment shock" they said that the people needed to change their spending habits. They talked a lot about not going to high-end stores to buy clothes and to not travel a lot. A lot of this section seemed to be about basic money management.
They said that NACA doesn't look at credit but rather at payment history. To be NACA-qualified you have to pay your bills on time and resolve bad credit items. That's not an issue for me because my credit is perfect.
The major key benefit, though, to NACA seems to be the low mortgage rate. The rate is now around 4.375%. Apparently, though, if you put a down payment, every 1% down reduces the interest rate by .25%. So that is something that I find attractive since, if I do receive an approval, I do want to put a down payment down. Down payments, however, are not required.
After discussing that phase former participants talked about how long it took them to buy a place. Most of the speakers took a few months. So I found it interesting.
My greatest fear about NACA was that they wouldn't be professionally run. So far they seem knowledgeable. I filled out the information sheet and left it with them. At same time, though, I am talking to realtors and will be looking at banks to see what they offer.
The main concern that I have is that other real estate agents may be hostile to NACA. Because NACA apparently takes longer and tends to serve a demographic with bad credit and limited finances, even if they approve me relatively quickly, some sellers agents may not want to deal with me because "he's with NACA". I asked the real estate agents who work with NACA and said, while some agents don't like NACA, others do because it means that the borrower is more likely to be able to get through the sale.
So I am going to see what NACA can do for me and find out what I can afford. Part of me is resigned to having to live in a neighborhood that is "emerging" or on the borderline of bad areas. Yet, if this program helps me get my foot in the door, then it is a start.