March 6, 2017 at 3:09 pm #36391
THANK YOU NACA for this awesome 0.0625% rate 15-year mortgage with no money down, no PMI and no closing costs for my 257k newly built house!
March 2016 late night – in my 2BR apartment, looking at Tillman plan of D. R. Horton at Brookdale community just north of air force base with one bedroom downstairs and 4 bedroom upstairs, 2862 sq ft area and base price tag of 225k. With only a few grands in my bank, I thought, maybe when I earn enough to save 50k, that I will buy such a nice house. Surely paying 775 monthly for rent was looking much better than paying close to 1250 (950 to mortgage, 300 to taxes, insurance, HOA, etc.) with traditional 30 year ~4% mortgage after paying 50k (20% down and closing costs). We are 5 people, including my four-year old, crammed in 1100 sqft and I was fooling myself that spending in a house is not a good idea and I would rather invest the difference between my mortgage and rent as well as any closing amount.
April 2016 – a friend closed on a house. Some 9k on closing costs (including everything) for a ~240k house with ~1700 monthly mortgage (including everything) for 30 years. He is paying PMI and the HOA is high. He is very happy and I am very happy for him! I was like, both of them are earning, so probably it makes sense to get some extra space as the family is getting bigger.
June 19, 2016 Sunday evening – randomly talked about renting vs buying with my neighbor, and he uttered a word NACA. What is it? He said they don’t have closing costs and his relative who earns 100k closed on a 200k house without paying any downpayment and closing costs. This captured my interest. How did he know about NACA? Because the local office branch manager and my neighbor play basketball together! Went home, signed up for the workshop the Saturday following, 6/25/16. Also shared the information with ALL my neighbors and encourage them to come – Guess what? only I showed up out of all the referrals! (none of them closed through NACA yet, but surely a couple are in pipeline!)
June 25, 2016 – attended NACA workshop. I felt that people need to be MUCH MORE quantitative about how they run their household and more informed of how money comes and goes through their bank accounts. Towards the end, I heard a recent NACA homebuyer say he closed a house worth 200k with monthly mortgage of close to 800, by “buying down” interest rate to ~1.3%. What is BUYING DOWN? So, you pay money out of pocket to “buy down”? why? the money disappears? why not put downpayment rather than buying down? He said that his seller contributed 12k and he contributed 2k towards buydown? So, seller can put money towards buydown too? How does that work? what are the advantages?
Met many of Charleston NACA office employees including the branch manager (my neighbor’s basketball buddy!) and RED agent. RED agent requested everyone to be persistent and proactive, as the NACA process can get tedious to some, but eventual fruits are worth the pain.
Enough info for me to digest and process.
The same afternoon, I took my wife and boy to the same community I was looking at online in March. It was D. R. Horton. The sales agent said he was familiar with NACA and that they can contribute as much as 10% (or 10 points) towards buydown, but typical amount is ~10k. We did not show any intention to buy or any committments as we did not even know whether we are going to buy. So, it was just a window shopping and looking at the community and all. No thoughts of sales yet. We did not even know where we stand on buying with my 44k post-doc salary. And NACA surely looked too-good-to-be-true, and when it is TGTBT, it generally is … 🙂
Early July 2016: I had a family+work trip coming up, so I knew I wont be able to follow-up with NACA. While I was away with my wife and kid, I already started assembling documents for qualification: bank statements, tax returns, pay stubs, etc. hoping I would get an intake appointment soon and will qualify right away. Did calculations with 235k in mind (Tillman prices already bumped by 10k in 4 months) and with 11k buydown on then 3.125% 30-year mortgage, I was looking at 1200/mo mortgage! I was like, piece of cake, I am already paying 775 in mortgage, just finished paying my car loan and my boy’s pre-K school stopped, each costing ~$250/mo, so that should make me qualify automatically for 1275. Nothing to worry and keep doing what I am doing.
mid-late July 2016: I got my NACA ID (somehow slower than usual, but they said people’s interest in NACA is increasing), learned that next available appointment is Oct 2016 local office or Sep 2016 telephonic, but learned that they can accommodate against any cancellations. So I started calling NACA local office every other day, checking for any cancellations, requested online chat to waitlist me against cancellations, and got my intake appointment on August 3, 2016!
August 3, 2016: First intake appointment. Me and my wife went prepared. Our MC has been friendly and professional, helped us figure out the numbers, and said that we have not demonstrated consistent saving of “payment shock” for 31% of monthly income worth of mortgage for the month of July. I explained that we will be naturally saving 500 bucks as no more car loans of pre-K fees. But she was like “we can’t forecast your spending habits – you need to demonstrate 3 months in PAST!” She had a point. Then she suggested, “how about one-time expenses? I can try excluding them for you with your letter of explanation!” And voila, we showed the trip expenses as it is one of a kind (I generally get reimbursed for work-related trips, but these were the ones where I was to bear expenses so that I can use the travel awards I previously won) with an LOE during the the following week and after 2 weeks, I was qualified, ready to see homes with NACA RED!
Over the two weeks that followed (late August, early September) we checked more than a dozen houses, majority of them preowned, zeroed down on a couple, but finally ended up with Tillman that we originally liked (to make a full circle with a waste of time, lol – but probably worth it).
August 30, 2016: Day we were scheduled to sign a contract – received a note from the builder that they are not honoring any clients that go through NACA for select locations! Sales rep said it is beyond him and there is nothing he could do about it. He said the only way to secure a house is to sign a contract. He offered 10k+5k towards closing costs if we go with his preferred lender and while it is no where close to NACA, we thought this would be the best option to have. Frustrated with what happened, I created a topic: http://forums.naca.com/?topic=consistent-inefficiency-of-naca-on-closing-results-in-builder-aversion-for-naca/#post-33930
Sep 6, 2016: So we signed a contract, assuming it will be FHA loan and prepared to shell out some 10k and also higher mortgage (compared to NACA), hoping the issue would get resolved over coming few weeks. I heard Mr. Bruce Marks visiting Charleston office to get first-hand information about what happened. The Charleston office has expanded since then for sure, with 5 MCs in total and one exclusively doing new house closing and ensure new houses close in 15 business days.
November 2016: I got promoted with a salary bump and I started considering 15-year mortgage which was beyond my reach until now (pay 1180 for 30 years or 1620 for 15 years? choice has been obvious for me, and I will soon share my custom mortgage calculator with buydown option (not available otherwise except on NACA website but there can’t make side-by-side comparisons) after I make it third-party friendly!)
Dec 10, 2016: Finally, the day has come when I received a phone call from the builder’s sales rep, who said that they will honor NACA and I would have to sign the contract again, in NACA format (needs a “wet” sign and not electronic sign!).
Dec 12, 2016: We went to the builder, signed the contract again, he considered earnest money from previous contract as earnest money for this contract (keep this in mind as more info on it later, lol).
Dec 28, 2016: Turns out, something was not right in the contract, so we have to sign the contract again, now at NACA office (Happy Holidays!)
Jan 15, 2017: Found a great deal on an 8-seater dining table in costco during a casual trip, so bought it in 5 minutes, called a friend with a truck and tucked it in a friend’s garage while we wait to close on the new house!
Jan 17, 2017: Bank loan application was placed. So many conditions etc.
Jan 28, 2017: learned that ikea had 15% discount going on bedroom sales event, so drove up Charlotte in a rental truck and bought some furniture to dump in a friend’s garage
Early February 2017: delays with inspection due to multiple reasons beyond the builder’s control (permits, water, electricity, inspections)
Feb 13, 2017: clear to close! Expected closing date – Feb 22, 2017. Couldn’t close on the same weekend for reasons unknown. Then, closing date moved to Feb 27, 2017! Frustrating 2 weeks!
Feb 20-24, 2017: I was out of town.
Feb 27, 2017: CLOSED, FINALLY! Moving during weekday in 6 hours was no fun, as we got the key after 3 PM and we moved all the boxes (I never knew we had so much stuffed in a 2BR – not sure how much we would stuff in this house!). We got awesome movers, who did the job smoothly. I drove the 26′ truck for the first time in my life and was impressed and so was my family and the movers 😉
Feb 28, 2017: cleaned up rental apartment, turned in the keys
March 1, 2017 onwards and ongoing: cleaning, unpacking, cleaning, unpacking,…, energy efficient upgrades, smart home, security system, security cameras, solar, fence, other upgrades, window blinds, ikea furniture, dining table, fixing minor imperfections, calling builder/plumber/electrician with the problems, the list goes on! Its a mixed feeling and it is too tiring, but this makes it worthwhile – my 4 year old loves his new house and is excited to stay in his new house and help daddy fix things! My wife loves it as well, and her surprise “smart” lighting in kitchen with change in temperature (yellow to white) and dimming (Osram Sylvania Lightify) made her happy!
Thing that I miss about my apartment – my 5.5 miles bike ride to work is not possible with new house being 18 miles away from work as it is too much time to bike. Gotta buy another car soon!
Cheers and look forward to sharing my experience further and helping others! Thanks again to everyone involved in my home buying process, especially NACA!!!
PratikMarch 6, 2017 at 3:24 pm #36392GazelleFocusMember
My hero, @Pratik! So happy to read that awesome story. Congratulations to you and your family! We looked at D.R. Horton here in NC, but it was Express Homes. Is that the builder or just D.R. Horton? I read a bunch of terrible reviews on Express Homes so we decided against it.
Your interest rate is killing it, man! That is incredible. Did you end up with Citi or BOA?
Congratulations again and please stick around, we’ll need you! (Im)Patiently waiting to hear from the underwriter.
GazelleFocusMarch 6, 2017 at 10:00 pm #36394
Yeah agreed not the best builder but know that ALL the builders work with dozens of contractors and there always will be opportunities to screw up – more so for one builder than the other, understood. However, D R Horton is a respected builder and the quality of their products is good overall. Now of course there will be difference between Emerald product with an Express product. But with all said and done, Express is not the throw-away product. It is generally MUCH cheaper than, say, Emerald and overall reliable if you like the location and floor plans. Know that they do offer 30-day complete warranty, so you can put a punch list AFTER you move in and they will fix issues within a month. They also have a 1 year bumper-to-bumper warranty if you find issues later. Now of course no one wants to have any maintenance going on after moving in, but they do have this “just in case” option. If you go to “owners” section of their website, you would know these terms. Maybe NC is different from SC a bit, but you just have to go click NC and see what they have to offer and then decide if you wanna go with them.
0.0625 = Citi always. 0.125 = minimum BoA can go.
Best wishes to you with your closing!
P.October 27, 2017 at 7:44 am #39162
I spoke with DH Horton and was told that the incentives can only be used with their preferred lender. How did you avoid this?October 27, 2017 at 8:18 am #39163
@Sunshineas1, it is (an unwritten?) rule that if the preferred lender cannot match the offer you have come up with another lender, the seller/vendor has to give the incentives that you were to receive with the preferred lender. Many sellers don’t talk about it, but they cannot “force” you to go with their preferred lender. By not matching the NACA offer with their preferred lender and still “strongly insisting” you to go with their preferred lender by way of “incentives” will become illegal and can lead to lawsuit against them.
So, agree to their contract page where it says that you will get 5k (or whatever in your state) if you go with their preferred lender. At the time of closing, their preferred lender will not be able to meet NACA’s offer (NO OTHER LENDER CAN – KUDOS TO NACA!!!), they will let you close with NACA and still give you incentives. You want to use it towards buydown (along with any other discounts that DRH offers – if they ask to waive upgrade fees or give you a discounted price, you want to tell them to use those waived fees and discounts towards closing costs)!!!
Best wishes and this should be straightforward for you if you close with DRH. If there are any issues, please message me with your details and I can talk to my selling agent at DRH who can facilitate smooth closing for you.
P.October 27, 2017 at 3:55 pm #39175
Thank you I will go this weekend and message you if I have issues.October 27, 2017 at 4:02 pm #39176
If this is your first time going to DRH, please put my name as your reference – they might channel referral incentives (1k?) to me 😉November 10, 2017 at 3:35 pm #39321
oh no I already signed the contract. Since this one isn’t the final because I know I want to use naca as the lender. Do you think I will be given another chance to put your name as a referral because you actually helped a lot?November 11, 2017 at 2:05 am #39329
yes try it – say you missed on mentioning the reference at the time of signing the contract – no harm in trying 😉November 17, 2017 at 3:55 pm #39408hrgr21Member
Hi, maybe you can offer me some advice. I am going through something similar. DR Horton in Georgia will only give me $750 with NACA verses the 5k with their lender. I am calling, emailing, and 750 is the best they will give me.November 17, 2017 at 4:03 pm #39410
Hi @hrgr21 – just sign their paper work that you will go with their preferred lender. There is a fine print in that agreement that their preferred lender will match any offer that you bring from outside – may it be HUD, Navy loan, doctors loan, whatever. In the event their preferred lender cannot match the offer you bring on the table, the preferred lender will default (by not matching your awesome NACA offer) and therefore you will be entitled for the 5k per the agreement. Don’t worry about what they say right now, just sign that you are doing an honest effort to go with their preferred lender 🙂 However, if you don’t sign that preferred lender agreement, you will lose that 5k for sure!
Best wishes, P.November 17, 2017 at 6:08 pm #39420TTrumbleMember
Great advice from pratik! The voice of experience!
Online Operations, NACA
email@example.comNovember 20, 2017 at 9:02 pm #39439
SO I signed the contract wrote a check for the earnest money to hold the property that will not be built until Jan 2018. I have 2 questions. 1. I signed the contract for the preferred lender online I still haven’t received a approved or decline. What am I supposed to be doing now? When does the P&S agreement step come in to play? I’m assuming I’m on step Step 5 because I can’t move forward until the home is actually built correct?November 20, 2017 at 11:34 pm #39441
@Sunshineas1, congratulations on blocking the house! Chances are you might never hear back from preferred lender on approve/decline or anything, as you will end up using NACA and they will just give you whatever bounties for going with the preferred lender, as it would be impossible to match the NACA deal. Hold tight, sit and relax! I never paid attention to which step I am at. Things just happened (with delays for various reasons, primarily non-NACA reasons) and finally everything worked out after months of frustration 😀 Keep you cool through the process – the only thing you can do is to actively follow-up as and when needed. Best wishes, P.November 26, 2017 at 6:21 pm #39484Swtneka3Member
Always a pleasure to read your journey.
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