Seller Concessions Use

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This topic contains 8 replies, has 3 voices, and was last updated by  southflorida 1 month, 3 weeks ago.

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  • #41920

    moonlight29
    Member

    I have a question on how seller conessions work with NACA. I want to use my $1600 for repairs for the home. Will i get the $1600 OR will I have to hire a contractor to work with NACA HAND and they pay out the $1600. This can be a problem for me because, no one in my area wants to work with NACA. I know i can use them for buying down the interest rate and that would be my last choice if i couldnt get the $1600 back for repair.

    #42132

    pratik
    Member

    I would use 1600 from the seller towards buydown and pay the repair costs out of pocket. Buydown is always a smart choice if you ask me: any money you put towards buydown will be recovered as less interest amount paid on monthly basis over 4 years (30-yr mortgage) or 2 years (20-yr mortgage) given current interest rates of ~4%. For the rest of the loan duration, you will be saving money for the rest of the 26 or 13 years!!! while i understand everyone’s budget is different, taking money out of seller’s pocket would enable you to push further with the 7 point buyer limit on buydown. Best wishes, P.

    #42133

    moonlight29
    Member

    Thank you for the response. I will definitely use your advice and buy down the interest rate. I want to have the home paid for in less than 30 years.

    #42137

    pratik
    Member

    See if your finances support you for 15-year mortgage then – because it would offer a MUCH BETTER bang for your buydown money (0.5% lowered interest per 1 point in 15-yr mortgage vs 0.25% in 30-yr mortgage). Also look into mortgage credit certificate program (MCC) if you end up going with 30-yr mortgage (as MCC typically doesn’t support 15-yr mortgage, at least thats the case in my state). Another thing to be mindful of is that if the interest rate is lower (close to zero), it would actually be prudent not to pay-off the mortgage early but rather invest that extra money in retirement funds and other instruments to secure/improve financial future :-). Good luck! P

    #42138

    southflorida
    Member

    the mortgage credit certificate program (MCC) is basically just a credit in your tax returns for property taxes paid, right?

    #42140

    pratik
    Member

    Yes, and let me try to quantify the operative word “just” that you used. Suppose you are paying 6k every year in mortgage (that is 500/month), which would go down as the loan gets paid off, but will be close to 6k in good first few years of your mortgage. Now if you are in 15% tax bracket, you will save 900 in tax breaks of this 6k you paid in interest. However, assuming the MCC is providing a modest 33% credit, you will get 2k back through MCC and 15% tax breaks on rest of the 4k, i.e., 600. So, 4600 savings in a year with MCC, which is 3700 more than if you don’t have MCC, and that is every year for at least first 10 years, and then little less as your interest payments go down. What would you do with this extra savings that just come back to you every year without any extra effort? Hope this helps 😉 Cheers, P

    #42150

    southflorida
    Member

    thank you @pratik … Would need to apply for the MCC with my local county?

    #42151

    pratik
    Member

    google it, ask your MC, ask realtors, ask somebody. There may be strict timelines on time of application (typically a couple weeks before the closing date you have to have MCC application in place? or at least thats how it is in SC). I find this:
    http://www.floridahousing.org/lenders-loan-officers/florida-housing-mortgage-credit
    50% credit – pretty good. Be proactive and push your NACA office for that and well in advance. Contact Natalyne.zanders@floridahousing.org or call them for further details. Make it easy for your NACA office, as it is you who will be saving money after all :-\. Good luck! P

    #42152

    southflorida
    Member

    oh, I thought I would be saving money after buying, so this is something I can do before?

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