Buy Down Amount Needed

[Faith81]

Hi guys I need help…..again.

I havent been able to get in touch with my counselor for over 2 weeks and member servcies just keep emailing her to call me. I also got an email that says my counselor is no longer with the remote counseling and the new counselor has not responded to me either. Very frustrated because I see a house that I am very interested in and cant get an idea of how much buy down I need to get it.

@Nelsont or @TTrumble would you guys be able to assist me with an approximate if I provided you with the details to my qualification. I cant even access the PSL because I am getting an error and even if I could because of the buy down situation it wouldn’t be accurate.

Thanks

[Nelsont]

@Faith81 I am not a naca employee. I can help you with the formula but, I don’t suggest you provide specifics to anyone but your MC for security purposes. @ttrumble might able to get more in detail.

As far as the psl goes the webfile does not allow psls to be generated if you buy down as a way to ensure your MC reviews your file.

The basics are as follows: 1% of the purchase price of the house reduces your base interest rate by 0.25%. In other words if you plan to offer $100,000 then it would cost you $1000 to lower the interest rate 0.25%

To figure out your affordability plug in the offer price to a mortgage calculator along with the most recent tax information, estimated home owner’s insurance and the current naca base rate of 3.125% for a 30 year loan. If you use a generic calculator make sure the down payment is zero. Also take note if the claculator automatically adds PMI. The number you get will be your base PITI (just subtract the PMI if it is added in). Lower the interest rate in 0.25% increments (3.125, 2.875, 2.625, 2.375…) until the PITI is at or below your approved maximum. The number of increments is the number of points in industry language. Multiply the number of points by 1% of the offer price and you have your buy down amount. So for a $100,000 house if you buy 5 points that’s $5000 in buy down which would give you 1.875% interest rate. Make sense?

• This reply was modified 2 years, 2 months ago by Nelsont.
• This reply was modified 2 years, 2 months ago by Nelsont.

[Faith81]

Totally worked!!! Thank you @Nelsont 🙂

[TTrumble]

Hello all,

Great explanation by @Nelsont!

Just FYI, I have an Excel spreadsheet that can help with mortgage calculations. It’s a basic amortization spreadsheet, but it can really help figure out how the numbers fall together. Anyone who needs it should just shoot me an email request.

Tim Trumble
Online Operations, NACA
ttrumble@naca.com

[jasmine1103]

@faith81 when did you know who your MC was? I attend the purchase workshop tonight and I have my eye on a property. when do you find out who the MC is so I can conduct the PSL quickly?

[Faith81]

@jasmine1103 I knew my MC from the time they made my appointment for my initial intake. Right now I am on MC number 3. Her name is also on my web file.

[jasmine1103]

@faith81 okay i thought so. I read that they may change after qualification but i thought they switched after qualification. Thank you for clarifying

[bpmosullivan]

Hey @ttrumble, i would like a copy please of the excel spreadsheet

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