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Thanks Tim. We don’t have a rehab. Just a straightforward transaction. The sellers repaired minor things found during inspection. The applications shows over $2400 worth of prepaids. The calculation on the application show Available $ buydown = Sellers + buyers buydown – Prepaids.
Thank you all for your answers.
Tim, so if someone is eligible for the bank match, contributes 15%, 7% towards buydown, and seller contributes 6% towards buydown. Will Bank of America first match my 8% (15%-7%) to lower the 30-year rate down to 0.125? and then apply the excess seller contribution as principal reduction?
Or do they do it the other way around? apply both buyer and seller contribution to the buydown first, and then if it does not bring it down to 0.125%, they would use the bank match to lower it?
Thanks TRW2294 for replying. I have read it on the forum. The posting answers a different question. Hopefully Tim can shed some light on this.
@TTrumble: Thank you for the clarification, you outlined how it works well. So even if someone makes more than the median income, he/she can still contribute 7%-$3000-3% of repair cost, but won’t receive matching contributions from the bank. This is perfect for the 15-year mortgage, as it allows buying the rate down to 0.125% if no repairs are needed or if the seller contributes to offset what is taken out by the HAND fee. I hope my understanding here is correct.
@krisfnbs: I am glad that you were able to get a nice home and take advantage of the favorable terms that NACA makes available. I used to live in the DC/MD/VA area in the early 2000s. Real estate in that area is very expensive. Thank you for sharing your experience and numbers.
Thank you bpturner for the spreadsheet. I appreciate it. It would definitely help with quickly calculating different scenarios.
Thank you Tim. I am pretty much just looking to find out what the restrictions are for buying down the interest rate before the Feds increase the rates. I make more than the median income for my area, which I believe disqualifies me from the bank match.
For someone that makes more than the median income, and would like to purchase a 250k property using today’s rates in a area served by Bank of America:
– What is the maximum discount points as the buyer can I buy down for the 30 year and 15 year mortgages?
– Can the seller contribute? What is the maximum discount points the seller can contribute to further buy down the rate for the 30 year and 15 year loans?
– You mentioned that I will not be able to buy it down to 0.125% given that I make more than the median income, what will be the lowest rates possible for the 30 year and 15 year mortgages after maximum buyer and seller contributions?
- This reply was modified 4 years, 8 months ago by househunt.
@rashad3000: Thanks. Yes, we are hoping to do 15 years, but it will depend on how high the monthly payment is going to be after buying down the rate to 0.125%.
@bpturner: Thanks. I have tried emailing and calling my counselor, but I am not receiving responses to my inquiries. This is why I am hoping to get some answers here on the forum. I agree about setting up calculations to see how the numbers will work, but I need the information on how the buydown works to calculate the buydown figures, needed cash, and resulting PITI to make an informed decision about our purchase price range.