OPERATION HOMEOWNERS 2020

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  • #50686
    mrstaylor
    Member

    I’ve been reading as much as I can find on the NACA program and this forum has been so helpful that I’ve decided to create a thread to ask questions and hopefully track my story. I was told about NACA in June and immediately signed up for the closet workshop. I mistakenly thought it was on 7/21, drove all the way to the church it was being held at and then realized that the meeting was 9/21. I was discouraged but my husband told me we could use the next 2 months to study up and get prepared.

    I’ve watched a few youtube videos and got tips from several of these threads. I’ve scanned all our w2’s and tax summaries. We currently live with my mother and pay rent and I realized we were not doing it in a way that would be suitable so we’ve done cashiers checks for the past 2 months and I’ve saved the check stubs. (hopefully 6 months would be enough to get us qualified? Please let me know) We already save about $600 monthly, so hopefully this will cover the payment shock we will have.

    Does anyone have any recommendations for things to get/do to make the qualification process easier? I’ve printed the budget forms, just have to stop stalling and work with my husband on it.

    Also, we both have a collection item on our credit mine is about a year 4 months old. His may be a year and half (can’t quite remember) any suggestions on if we should try to settle this/start payment plans or maybe are they old enough to just write LOE’s for?

    I’m really eager to start this journey. I’m trying to be realistic but also optimistic and would really like us to be in a new home by march-may of next year.

    #50768
    Nelsont
    Member

    May I ask what area you are in that there are no workshops for 2 months? This time of year there are usually 2 per month.

    You do need to show more than 6 months rent however living at home and paying no rent is also ok. Just have your mother write a letter explaining your relationship to her your husband’s relationship to her the date you both moved in and the most recent date you have lived there. The dates need to be exact. Have the letter explain whether you contribute to household expenses or not. Your mother then needs to sign and date the letter. The signature needs to be in pen it can’t be digital. This letter will also need to be updated at every step in the process.

    It’s easy to determine whether your 600/month is enough. There are 3 numbers you need to be aware of. First figure out your combined gross annual income for you and your husband. This is before taxes. Then add up your total combined monthly recurring debts for you and your husband including rent. Does this figure equal 40% or less of your combined income? If so then 31% of your combined income will be your approved payment. This number is your monthly payment including mortgage principal mortgage interest home owner’s insurance property taxes and hoa fees. The difference between your approved payment and your current rent is payment shock. That will help determine if the 600/month you are saving is enough.

    The best advice I have to get qualified is have hard copies of everything. Even if you think you have everything you probably don’t. Pretty much everyone comes out of their first meeting with conditions they need to meet.

    The collections might present an issue. If you are on a repayment schedule and you have all of the documentation that might be ok but otherwise that could be a hard stop.

    Realistically plan 6 months including looking for a house from your 9/21 workshop if you have everything straight and there are no issues. From your workshop to getting qualified might take 2-4 months and the contract on your house needs to be 60 days and could go longer. Time spent looking for a house is in between.

    #50770
    mrstaylor
    Member

    We are in the Phoenix area, I’m not sure if all the other workshops are full but that was the only
    Available.

    I can definitely get this letter, but do you know if they would use the base amount we pay as rent? I just want to be sure that we wouldn’t have to save the full amount for payment shock since we do have a set amount we pay.

    The collections worry me because the original creditors have resold the accounts so the debts are much older than this but don’t look that way. I will try to get on a payment plan but if you’re making monthly payments it would be to pay off the amounts in full and those additional monthly payments for so long would definitely hurt us.

    Also, I know there are also MRF and PITI for 2+ months that they need to see saved. Would love to know what you think an estimate of the total for closing should be? I’ve seen some people say between 5-9k?

    Thank you for your insight!!

    • This reply was modified 1 year, 3 months ago by mrstaylor.
    #50772
    Klassy
    Member

    Start your payment plan for the two accounts in collections. Make sure you have something in writing to prove you set it up and are making payments when you show up, you’ll also need a letter of explanation.

    Make sure you have your tax returns and tax transcripts for the past two years. You can get the tax transcripts from http://www.irs.gov

    #50778
    Nelsont
    Member

    Not sure I understand what you mean by base amount in rent. You will have to save the full payment shock. If your rent is 500 and you were approved for 1000 then you need to show you are saving that extra 500. I’m not sure what happens if you aren’t but if you can’t then I believe you just get approved for a lower total PITI. Bottom line is if your approved PITI is more than your rent you can’t expect to cut things out of your budget to meet the PITI. You must be able to meet the PITI with your current budget without making and changes.

    MRF and closing costs are one of the more confusing aspects. Only you and your MC can determine an estimate because the estimate is based entirely on your finances and the area you buy in, taking property tax values into account. But you can expect your MRF to be 2+ months of PITI, 12 months of insurance, 6-10 months of property taxes.

    Once you put an offer on a house the MRF will change because what you were given was just an estimate and each house is unique and will carry with it it’s own tax value and if you are buying the interest rate down then you will need more than your MRF. You can get an idea by finding out what typical home owner’s insurance is like for homes in your area in your price range. Mine is 930 for the year though I’ve seen on this forum down to 500 or up to 2000. Then play with mortgage calculators on real estate websites plugging in the current NACA interest rate, $0 for the down payment and use the sliders to see how much your payment will be based on the sale price. The property taxes for that house should be on there and also an estimated monthly cost of insurance. Maybe you need to lower the interest rate using the buy down feature. Every quarter percent (0.25) interest will cost 1% in sale price. At 3.5% interest a 100k house will cost $1000 to get a 3.25% interest rate. If you choose to buy down the interest rate this is funds on top of your MRF and they do not want you to use all of your savings. It is recommended to have 2-3 months PITI saved on top of you MRF and buy down.

    Hopefully this all helps you out.

    #50779
    living20057
    Member

    I would get a copy of all three credit reports and look at the exact dates listed. I would also write a letter of explantation for anything negative on your report, including something from 4 years ago. Also write letters for any name or address discrepancies on your credit report.

    #50780
    mrstaylor
    Member

    Thank you, Klassy.

    Nelsont, thank you for all that. To clarify I was wanting to make sure that if my mother wrote a letter stating we pay her $800 monthly but we have 6 months of appropriate proof and not 12 months we wouldn’t be required to save our total monthly approval as payment shock. So if we’re approved for 1100 monthly, we Would only have the $300 payment shock and not the full $1100 since we don’t have a typical “lease agreement.”

    And yes thank you that does all help! I’ll look up an estimate of the property taxes and insurance in my area to get an idea. We definitely hope to buy down the rate but with first time home buyer programs in the area that allow NACA.

    I’m really eager to start the process I’m just worried that we have too many variables that
    Will signicicantly delay the process.

    #50782
    Nelsont
    Member

    I think you will be fine but, this is something your MC will better be able to answer.

    Just make sure when using programs/grants in conjunction with NACA make sure they meet these 3 criteria:

    1. The grant is a 100% gift that has no payback stipulations (for instance it must be paid back if you move out within 5 years)
    2. The grant is able to be applied toward down payment (with NACA any “down payment” becomes interest rate buy-down)
    3. The grant must not be for closing costs only or for non-recurring fees

    Some states consider grants taxable income on a 1099 for next year so that is also something to look into.

    Don’t worry too much about your variables. Everybody has them. You are doing the right things and being proactive. If you have to wait in order to get qualified that is no big deal. The earlier you start the faster and easier the process will be.

    #50789
    mrstaylor
    Member

    Okay, that’s so good to know! I have a good list of things to keep me busy until the workshop! If any other tips or advice comes to mind feel free to update me!

    #60993
    mrstaylor
    Member

    me again! We’ve gone to our workshop and our intake meeting is Dec 16th (our anniversary lol) hopefully we will get some good news.

    I’ve started to upload all necessary docs, I have a folder on google docs as well so that if anything is requested and we’re not home we can quickly email it over. The MC who led the workshop recommended we do not contact the creditors for our collection items until we have our intake meeting. If we do need to be on payment plan for those I’ll try to settle them and pay them in full to keep the ball rolling. Does anyone know if there still needs to be a waiting period if you have a letter stating the item has been paid and settled?

    I’m uploading our bank/cc statements, paystubs as we get them and have uploaded our w’2, tax returns, and transcripts already. I have also written a few LOE’s that they might request. Aside from the budget forms, what else am I missing? Does anyone have any other suggestions of what to do in the mean time?

    #60994
    Nelsont
    Member

    As far as waiting periods I think you will be fine with a payoff and settlement but, it depends on when the collection occurred. If the collection is recent then you might still need to wait. But again, having it paid off is the best thing you can do whether you need to wait or not.

    #60996
    mrstaylor
    Member

    They will be 2 years old April 2020, we’ll probably have to use our tax returns to settle them if it’s required but I would much rather use that for buying down our rate or furniture!

    Also, I know we are not suppose to open any new accounts or apply for credit but does anyone know about auto loan refinancing? It’s not “new debt” and it would lower our monthly PTI.. not a necessity but I was just curious.

    #61000
    Nelsont
    Member

    You might have to wait until April regardless. I think the only way not to wait is to pay it off. There is a 2 year policy that may be non negotiable.

    You can refinance as long as your payments are lowered and not just stretched out. Before you do this though run it by your MC so they can crunch some numbers. What you don’t want to have happen is getting a refinance that doesn’t do a whole lot for either the car payment or your DTI.

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