May 7, 2019 at 11:48 am #48676
Thanks so much to everyone who has provided support and answers as I scramble to go from “What’s NACA?” to ATD to buying a house as quickly as we can manage. I have heard some conflicting information about the timeline for signing on a new construction home and I want to be as clear as I can be so we can communicate effectively with the builder, plan our housing for the next several months, and of course satisfy NACA requirements and be as ready as possible for ATD.
1) I have read that one must be NACA Qualified before signing to purchase a new construction home. Is that correct? I ask because it is a 5 to 6 month wait once we sign, and obviously we want to get that going as quickly as possible.
2) We currently own a home, which will be sold in the coming months. Obviously we must close on that sale before we can close on the new purchase. However, I was given two answers about the timing for having the house on the market. Must the house be listed for sale before we can be NACA qualified? So more specifically, should the house be on the market before we attend ATD if we believe we are otherwise ready to go?
3) Likewise I was given multiple answers on the timing requirement for the closing of the sale of our current home, and the need for a current home sale contingency in the contract with the builder. How long before the closing on our new purchase must we close on the sale of our current home? And is such a contingency required? The financing contingency would already allow us an out since we won’t be able to get the financing without selling our home anyway.
Thanks very much in advance to anyone who has time to offer answers on these very specific questions. The more deeply I review everything, the more hopeful I become about being able to make this work, and I’m just sort of waiting to find out what I’m wrong about that sets us back.. haha.. I’d rather find it out before driving 6 hours to New York!
BakerMay 8, 2019 at 5:59 pm #48721Newlywed HomebuyersMember
So this is what I did although I don’t recommend it.
I figured we needed to start construction before NACA could approve us in order to be done by July when our lease ends
We signed a contract with the builder & ultimately decided to go with NACA.
So what they had to do was resign every document with the updated date (post-approval) and transfer our earnest deposit to the NACA attorney.
It was hard just tediousMay 9, 2019 at 9:53 am #48736
I had read other people had done the same thing, but I don’t want to jeopardize our process. It seems like a thing people do, but maybe not a thing NACA is very happy about…May 10, 2019 at 3:50 pm #48772TTrumbleMember
You pretty much summed it up with “It seems like a thing people do, but maybe not a thing NACA is very happy about…”
NACA’s policy is very clear, that you are not allowed to go house hunting, much less sign a contract on a home, whether new or existing, before you are NACA Qualified. This is for two main reasons: (1) You only need to hit one bump in the road during qualification to set you back enough that you don’t make the closing date and lose both the house and your earnest money deposit in the process. (2) A lot of sellers won’t sign the contract anyway unless you have an approval letter. With houses selling so quickly these days, the house will probably be gone before you are able to make a formal offer.
People buying new construction get around the second item by tentatively agreeing to use the builder’s lender. The only saving grace in committing to a new construction home before you are NACA Qualified is that you typically have several months before the home is completed, which probably gives you the extra time to get past the bumps in the road before the home is ready. We still advise against it though, because it’s still potentially a tricky and dangerous situation.
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firstname.lastname@example.orgMay 16, 2019 at 3:28 pm #48837pratikMember
Hey @BakerTheBaker, agree with what @TTrumble said, but I was forced to such a situation where I had to sign a contract or I risked losing the new construction. It is a double edged sword and can be a problem if one doesn’t know what one is getting into. Besides, there are many unknowns and things beyond our control. So, careful with that. If you had to go this path (scrapping the conventional loan contract and signing a new contract after getting NACA qualified), make sure that the builder takes a new check of earnest money deposit so that things are straight-forward for underwriter at the time of closing (in my case i had to give a letter of explanation on my particular situation on why I could not use NACA at the time of first signing the contract.)
As to being an existing home-owner, please make sure that your current house is in P&S contract BEFORE you sign the new construction NACA contract. Likewise, you need to have your current house sold at least a day before your NACA closing as NACA won’t close if you have a house on your name on the day of closing. To that end, adding a contingency clause is prudent on your new construction contract to relieve you of potential legal/financial mess.
PratikMay 16, 2019 at 3:52 pm #48840
Thanks @pratik! We hope to have the house sold long before closing, so that doesn’t become an issue. A short term rental will be costly, but will also ensure a much smoother process for us. We’re going to go ahead and wait to sign once we’re NACA approved. Since we’re going to ATD in June, and our savings is on track (and possibly was on track for April as well, depending on what the MC will accept as one-time allowances) the longest we should have to wait is August. Our deadline for other reasons is to close by February, but of course we’re hoping to get in ASAP.May 16, 2019 at 3:58 pm #48841pratikMember
I can say how economically draining the rent can feel once you are a homeowner, especially with NACA! Best wishes to you with ATD qualification. I would fly to Hawaii if I have to for ATD, as the travel expenses are cheaper compared to the every single month of delay waiting for traditional MC appointments and resulting rent that you lose over months!
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