Priority / Target Member – Buy Down question

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  • #71905
    sweetlilly
    Participant

    Is a priority member the same as a Targeted member.

    If I am not mistaken, the lowest mortgage rate that can be had though NACA is .125%
    This can come from either the buyer (5%) and/or the seller (10%) and a GRANT.

    My question is can a Priority member (less than 80% ) of median buy down the interest rate to as low as .125% ALONE if they have the funds and choose to do so?

    Basically trying to see how best i can use a buydown to structure an offer to allow me to buy the most house my housing ratio will allow.

    #71906
    Nelsont
    Member

    Yes and no. Members are either priority or non-priority. Areas are either targeted or not. The terms get thrown around. Priority members can purchase anywhere in and MSA for which they are qualified. Non-priority members must purchase in targeted areas.

    To my knowledge a grant is considered buyer funds which would be part of your 5%. I am pretty sure it’s a 15% max for buy down with the 5/10 breakout of buyer/grant and seller respectively. That is not to say you can’t use a grant. Anything above your 5% would go toward principle reduction.

    To fully answer your question yes it’s possible for any member regardless of priority/non-priority status to buy the interest rate down to 0.125% without using seller contributions. It just depends on what the current rate it is at the time you make an offer.

    Today’s rate on a 30 year mortgage is 2.75%. That means 5 points of reduction (1.25%) will get you a final rate of 1.5%. Being under the 80% income threshold you will automatically get 0.25% lower so now you are now down to a final rate 1.25%. Meaning based on today’s rate you would need an 4+ points from the seller to get that 0.125% final rate.

    The current rate of 2.25% for a 15 year mortgage comes with less restrictions and higher buy down increments for the same point value if that interests you.

    • This reply was modified 1 week, 6 days ago by Nelsont.
    #71908
    sweetlilly
    Participant

    Thanks

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