buy-down rates

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  • #77888
    pratik
    Member

    Hello,

    I am advocating NACA to a friend, but am not clear about the buy-down rates:
    I found that 1 point (1% of property purchase price) would bring down interest rate by:
    – 0.25% for 30 years, 0.5% for 15 years (NACA qualification workbook, v120, currently on the website)
    – 1/6 (0.167%) for 30 years, 0.25% for 15 years (mortgage calculator on the website and also on the purchase-product page)

    Which one is accurate?

    Thank you!
    Pratik

    #77890
    Nelsont
    Member

    The 1/6 rate started may 1 2021. The book hasn’t been updated.

    #77987
    TTrumble
    Member

    Hello Pratik,

    Good to see you here on the Forum again! Nelsont is correct. The six-point per one percent buydown rate went into effect earlier this year when Bank of America renewed their contract with us and committed an additional $5 billion to the program.

    At the same time, low- and moderate-income buyers or anyone buying in an LMI Census Tract receives an automatic 1% rate reduction from the rate given to upper income buyers who buy in an upper income Census Tract. As of today (12/30) the rate for LMI buyers is 2.125% for a 30-year and 1.375% for 15-year.

    I hope you and your family are doing well and enjoying the holiday season. We need to catch up soon!

    Tim Trumble
    Online Operations, NACA

    • This reply was modified 7 months, 1 week ago by TTrumble.
    #77990
    pratik
    Member

    Thank you @Nelsont and @TTrumble!

    These are great interest rates! I would appreciate a few more clarifications:

    1. Low- and moderate-income buyers: the income level for these buyers are below median (<100% median) or below 80% of median?
    2. Do you imply that now upper income buyers can buy in upper income census tract through NACA program, but with higher rates (which would be 3.125% for 30 years and 2.375% for 15 years as of today)? Earlier upper income buyers (non-targeted/non-priority members) were not allowed to buy in upper income tracts (non-targeted/non-priority areas).
    3. I assume upper income buyers are above median (>100% median) and not above 120% median. (previously non-targeted members, who had income of >80% of median, and then priority members, who had income of >100% of median).

    Happy holidays to you as well. Lets surely catch up! Hopefully Omicron won’t create havoc (higher transmissibility but lower severity) and possibly we are seeing the beginning of the end of this pandemic (attenuated virulence with consequent replications, this is how many vaccines were created for other diseases!) Having said that, stay safe! And I will ping you if I happen to be in Charlotte area – if you are in triangle, please make a point to visit us at our NACA home! 🙂

    Pratik

    #77992
    Nelsont
    Member

    80 to 100 is moderate income. Below 80 is low income.

    Yes non priority or high income (above 100%) no longer have location restrictions if they agree to the higher interest rate.

    As far as I know there is no income restriction. Only a sale price restriction (not to be confused with loan amount…I believe buyers cannot pay the difference to make up for a low appraisal or an above conforming loan limit sale price).

    #77994
    pratik
    Member

    Many thanks @Nelsont!

    Where on NACA website or workbook has this clarification been made?

    How can we help as members to update the website and the workbooks to instill this clarity @TTrumble? While the savvy members can dig into these forums and find the information, but it takes a lot of time and effort and the information might still not be up-to-date. The potential benefits of NACA might get nullified by the amount of (very preventable) effort one has to put in to move forward with the program. If we want NACA members to succeed in life, we must do everything to save the time drain that they face in (a) finding the right information (b) multiple follow-ups they have to make to NACA personnel in order to move their files. Between the two houses I closed through NACA, I could have easily saved a few months of my life that I could have used towards productivity (professional and personal), which includes spreading the word about NACA to even more people!

    Best,
    Pratik

    #77995
    Nelsont
    Member

    I don’t think I’ve ever seen those numbers on naca. They are fhfa, Freddie mac and Fannie Mae distinctions that naca uses. Or maybe census bureau?

    • This reply was modified 7 months, 1 week ago by Nelsont.
    #78004
    Kristijay
    Participant

    @pratik Non-priority members are still limited to purchasing in an MSA less than 100%. Areas that are less than 80% qualify for the priority interest rate. Areas that are 80-100% would receive the non-priority interest rate. Just to clarify… you CAN pay the difference between the appraisal price and the sale price as long as it is within your approved monthly affordability, but you are not permited to purchase above the conforming loan limits. There are tons of resources on the naca web page under the FAQ tab and the unofficial NACA Facebook page is a great resource also.

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