Bait and switch interest rate. Paying extra 25,000 in interest because of naca

[jacobshome]

@FBrunson like i stated in my original post, we made it ABSOLUTELY clear since day 1 what we wanted our rate to be and NACA should’ve did everything in their power to ensure we received that rate especially since we had more enough in our savings to cover the interest rate buydown, principle reduction, all escrow cost(taxes, prepaid ins)and everything else we needed for closing.

There was only 2 expectations i had when we signed up for Naca and started

#1 i had to get a house with a pool and
#2 Get the interest rate the lowest we could legally get.

Thats the reason we saved and sacrificed for so long.

[jacobshome]

Also we chose the area we purchased on fue to the fact we fell below median income guidelines that would allow us to buy down the interest rate to were we wanted. If we knew we would be stuck with a higher rate, we would’ve bought in the city of philadelphia and saved a ton on property taxes. But the lower rate allowed us to purchase more house for lower principle and interest payments.

[nathalie09]

Hello everyone!
Since previous threads are related to my worries, I will post it here as well. I spent my weekend on this blog trying to look for answers to my endless questions. It kind of helped me get some clarity but I still want to hear from the knowledgeable @TTrumble. I signed my bank application last Friday. I will provide some numbers next. The price of the property is $575,000. The loan amount was for 522,000. I am spending my life’s saving on the buy down to get the interest down to 0.062%. The total for the buy down with prepaid is $92,202. Before I left my MC’s office, I made sure I made a copy of the Uniform Residential Loan Application. We locked in the interest at 3.87% before the bank application.
My MC mentioned that the lender was giving me $52,882 to use towards principal reduction but I didn’t understand until I read a thread from Mr. Trumble about median income.
I noticed the application bank application says:
BUY DOWN (BUYER): 34,806, BUY DOWN (LENDER): 52,882 ***PRINCIPAL REDUCTION (BUYER): 52,882
I found out on this blog that the lender is providing me with this a lender’s grant because I am buying in an area where I am way below the median income.
Now, what completely threw me off was the fact that when I received the conditional commitment letter from the bank (last Friday) it said the following:

Loan SUMMARY
Loan amount: $522,072
product: 30 years
loan term: 360 months
INITIAL INTEREST RATE: 2,208% <—————
initial monthly P&I payments: $1,984.43 (does not include $804 property taxes nor home ins)
Total points: 6.657%

The interest buy down included in the commitment letter is from the $34,806? When I do the calculations I don’t get the exact number. Is it because it includes fees?
Why doesn’t the commitment letter show the 0.062% interest rate from the beginning?
When will I see the 0.062 from the bank?

Hopefully I can get a clear explanation. Thank you so much in advance.

[pratik]

@jacobshome: you had hit the bull’s eye in OP:

“The moral of the story be diligent, so fall for what they say, only go by what you have on paper.”

Luckily I have been diligent during my closing and scanning the piles of paper enabled me to point out that the interest rate was set at “current” 3.25% at the time of my closing instead of my preferred rate of 0.0625% and the duration of mortgage at 30 years instead of my preferred 15 years. I pointed it out to my MC and reminded her that this is the fourth time we are discussing it, she apologized and with pen corrected both interest rate and loan duration and both of us signed at the correction at multiple locations, and I got a modified CD after a couple days with all correct information. Apparently our branch manager was on vacation and so our closing got delayed by a week, and luckily there was no penalties on builder side for me, so I came out clean (but the closed house was dirty as the builder “forgot” to clean it!!!)

The title of your post is so misleading and you never revealed what interest rate you finally received after closing, and if you have been able to receive this interest rate through any other mechanisms. Disregarding, with your advice your friends and family will be diligent and go by paper in their closings with NACA and will not suffer consequences you faced 🙂

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