December 9, 2019 at 10:51 am #62951
Approved for around $365K/$2100 per month. Decent homes in the town that I work in run about $400k so any grant would definitely be helpful.
On a side note, can anyone please help me with how much Id need to buy down to be able to afford a $400k come? Running soke numbers it looks like I need to buy interest down ti 2.5% to stay within the max. Monthly payment. Thank you.December 9, 2019 at 11:31 am #62952NelsontMember
For the grants BOA offers 0.5% interest rate drop for members at or below 80% of the MSA income. You can also search for grants possibly by your local municipality or state. You need to make sure the money is not a forgivable loan, can be applied entirely toward down payment assistance and has no requirement for application toward “closing costs” or non-recurring fees.
For the buy down I’m sure you already the amount you actually need is completely dependent on the taxes, insurance and HOA fees (if any) as higher priced homes have higher taxes generally but, not always. Plus you can live in area where the taxes are not uniform. I live in a county with taxes less than half of the rate of the neighboring county 2 miles away and is still in the same MSA so that significantly changes what you can and cannot afford.
Anyway, each 0.25% interval in interest rate decrease will cost you 1% of the purchase price of the house. So for a 400k house each decrease of 0.25% will cost you $4000. For a 30 year loan at today’s rate of 3.375% you can either spend $12000 to get a rate of 2.625% or $16000 to get a rate of 2.375% if you wanted to be in that 2.5% range. You can only decrease in 0.25% intervals.
You also don’t necessarily need grants. Seller concessions are very common and getting a seller to contribute 3% toward “down payment assistance” would get you to 2.625% without spending a dime.December 9, 2019 at 11:58 am #62956Peapod0609Member
The math and advice @Nelsont gave checks out.
I can mention that I got a 5% seller concessions toward interest rate buydown. It really helped put my home in our affordability. I also got the 0.50% BOA grant that was mentioned above, and as a result I closed with a 1.625% fixed interest rate. I basically asked for 5% from the seller in buydown instead of lowering the purchase price. Which for me lowered the monthly payment. However, you do have to be sure that the home will appraise for the purchase price, so there is that to consider as well.December 9, 2019 at 1:24 pm #62967
Thanks Nelson. I’m glad to hear that about boa. I thought they only offered it to people at 80% msa. Im just right below it. How do I make sure boa is my lender?December 9, 2019 at 1:40 pm #62970TTrumbleMember
The buy down is done in half-point increments, or 0.125% for a 30-year loan and 0.25% for a 15-year loan.
To reach your $400,000 target with a $2,100 payment, you would likely have to buy down to the 2.5% range as you suspected (give-or-take a little based on taxes and insurance). This means based on today’s 3.375% 30-year rate, you will need 3.5 points, or $14,000 to reach 2.5%. Factor in the $3,000 HAND fee and you’ll need $17,000 (4.25 points) in buydown funds, whether from a grant, gift funds, seller concessions or otherwise.
Actually, five-year “forgivable loan” programs can be used. These are actually meant to be grants but they structure it as a forgivable loan to also ensure owner occupancy as NACA does with our $25,000 lien. The only hitch that springs up on occasion is that the “loan” would have to be in a third position lien following the mortgage itself and the NACA owner occupancy lien. Some programs refuse to subordinate to third position, which makes them incompatible with NACA.
Online Operations, NACA
firstname.lastname@example.orgDecember 9, 2019 at 1:45 pm #62973NelsontMember
80% is the max. It’s 80% and below…BOA is the only lender NACA works with currently.December 9, 2019 at 1:47 pm #62974
Thanks all for the info. @Nelson sorry I misread your post.
Do you guys know of any grants for California? I did not take into account the HAND fee
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