Lowest Possible Interest Rate

HomeForumsPurchase ProgramLowest Possible Interest Rate

This topic has 9 voices, contains 24 replies, and was last updated by  readyToday 673 days ago.

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July 16, 2012 at 9:14 am #1740

naca2012new

I’m looking to buy down the interest rate. What is the lowest that I can go?

July 16, 2012 at 9:29 am #1742

TTrumble

Hello naca2012new,

While some states do not allow a zero-interest mortgage, you may buy it down as absolutely close as possible to zero. I know of one homeowner who bought their rate down to 0.0125%. One percent of the purchase price will buy down the rate by one-quarter percent.

I wish you the best in your journey to home ownership!

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

July 16, 2012 at 2:27 pm #1751

DrMrsDEJ

To clarify, buying down the mortgage rate can only be down at the time of loan origination? Or is it possible to refinance with NACA and buy down the rate at a later date?

July 16, 2012 at 9:42 pm #1776

naca2012new

@TTrumble Thanks, it’s been stressful but I feel like it’s coming together. I have another question. If I’m receiving gift money (to use to buy down the interest rate), do I have to inform NACA that it is a gift? I was qualified without it and do not need it to purchase the home. This is simply the result of someone’s amazing generosity to help me. My MC never noted that I would have to list a gift; and now that I’ve been qualified (doing the bank application), says that it’s too late.

July 17, 2012 at 2:26 pm #1794

tbrown53

That’s a generous gift, your are one lucky person. Best of luck to you!

July 17, 2012 at 4:00 pm #1802

TTrumble

Hello naca2012new,

Yes, the source of ALL funds must be disclosed, but it shouldn’t cause any problems. NOT disclosing it however, is grounds for disqualification.

Congratulations on the gift! Please keep us updated!

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

July 20, 2012 at 6:36 pm #1906

naca2012new

@ttrumble – So if my MC says that it’s now too late to note it as a gift, what do I do? I’m still waiting to go to bank qualification. We’ve listed the amount as buy-down. I’m just frustrated that I have to find these things out from reading the forum and other blogs. Only then for my MC to present an attitude of “Well, you should’ve told me. Now it’s too late.” What exactly is his role besides asking me to resubmit information that I’ve already faxed?

July 21, 2012 at 10:31 am #1916

lrmatthews18

If it’s a substantial amount of money and it will really make a difference in your monthly payment then I would ask to speak with the office manager or regional manager.

July 21, 2012 at 11:16 am #1919

TTrumble

Hello naca2012new,

lrmatthews is right. Just because the gift came late in the process should know prevent you from using it. The buy-down typically saves three to five times the money over the life of the loan.

Ask to speak with the Ofiice Manager about what can be done, and please let me know what happens.

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

July 22, 2012 at 2:40 pm #1928

naca2012new

@lrmatthews – Thanks! I will do that. @TTrumble – I’ll let you know what happens.

July 23, 2012 at 3:46 pm #1949

jflinn6884

Hello everybody,

I have 2 questions I am hoping you can help me with:
1. My mother in law is our realtor and she is going to give us her commission. Is it possible to use these funds to buy down the interest rate?

2. At what stage in the process do you have to declare how much money you will be using to buy down the interest rate.

thanks.

July 23, 2012 at 7:36 pm #1956

TTrumble

Hello jflinn6884,

I’m glad that your mother-in-law is willing to help you with the rate buy-down, but she probably needs to consult her attorney first. Even though you are family, giving any or all of her commission back to any client could be considered an illegal “kickback”. Play it safe and check to make sure it’s okay.

Additionally, the funds are going to have to be documented as part of your MRF before the actual loan application is submitted in order to prove that you have them available for the closing. Considering she won’t receive her commission until after the closing, is she going to have the funds in advance to give you as a gift in advance of the application (again, providing that it is legal for her to do so)?

Please do your homework here and make sure that the actions of a generous family member don’t backfire on you.

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

July 24, 2012 at 4:19 pm #1976

jflinn6884

Thank you for your response Tim,

You gave me a fright. My mother in law re-checked with her broker and it is not illegal to gift a family member her commission from a related transaction, she must just inform all parties of the relationship.

However in response to your answer to my second question, unfortunately we will not be able to use this money to buy down our interest rate because she will not be in a position to pay us the money up front.

Thanks for your help and guidance.

July 25, 2012 at 7:03 am #1982

cantwait

@ ttrumble. If I’m purchasing a home could I also be the realtor ? Please advise

July 25, 2012 at 10:01 am #1987

TTrumble

Hello cantwait,

That would be entirely dependent on any conflict-of-interest restrictions you may be subject to in your state. I know of no NACA regulation that would prevent it, although you would have to become a NACA qualified Realtor.

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

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