NACA shock payment backdate?

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  • #77050
    buharyaw
    Participant

    Hello all!

    Just went through our intake and follow up. We will be having a payment shock of roughly $500. We were told that we need to show this for 3 months going forward. We have consistently every month saved well above the mortgage shock payment. So I am wondering if we are able to backdate all of our accounts to show that we have been saving the shock payment in order to expedite the process?

    #77051
    mikeyboy2547
    Participant

    I’m wondering the same. Great question.

    #77053
    buharyaw
    Participant

    Hopefully we can get someone from NACA to give a response and help us out

    #77054
    Nelsont
    Member

    Yes you should be able able to back date your savings.

    There are 2 things about how payment shock is calculated that sometimes throw members off.

    First, the payment shock is an absolute minimum value to be reached every month. It is not nor cannot be averaged. For instance saving 600 in August does not mean you only need 400 in September. You still need 500. In this example even though you met your longer term goal you still fell short 1 month which is the same as missing a mortgage payment so your savings history will need to start over.

    Second, and this ties in with averaging, putting 500+ aside into a separate savings account every month is great. But it means nothing if your other accounts don’t at the very least maintain status quo. The reason is because underwriters do not look at what each is account is being used for. They add up all acounts and look at the total. If that total doesn’t grow neither does your payment shock. For instance let’s say you have 1000 in your savings and 1000 in your checking and zero in your payment shock account. That’s 2000 total. Next month you need 2500 total. If next month you have 1000 in your savings 900 in your checking and 500 in your payment shock account then you only hit 2400 total not the 2500 needed. Likewise with averaging if your 1000/1000/0 goes to 1000/900/500 then to 1000/1200/1200 any way you look at it you saved much more than your goal over 2 months but you still missed your goal the 1 month. The fewer bank accounts you have the easier it is to get qualified but, you need to do what works for you.

    This may be a lot of information you already know but, I thought I’d put it out there just in case because that could be a reason your MC wants you to show 3 more months.

    #77055
    buharyaw
    Participant

    Thanks Nelson!

    Yes, I’m aware of how the payment shock works. I’m curious though as to why we need to show it 3 months going forward? Our total net savings across all accounts is well over the payment shock required and has been for the last year. Waiting the three months to show something that we can already show now is just a tad frustrating.

    #77073
    o0o7
    Participant

    Is there a .pdf or more detailed document that describes this breakdown in detail?

    We’ll (family of 2) be moving from $500 monthly rent to approx $900 in mortgage etc, = $400 monthly “shock”.

    So its unclear if each of us needs to (somehow?) sock $400 into a separate account 3 months, or both of us do the same at @ (a more feasible) $200 monthly…

    I “get” the requirement is to veritably establish we can consistently cover the additional expense. The questions is HOW (there being 2 of us)
    Thanks
    VW

    #77075
    Nelsont
    Member

    If both of you are qualifying together then everything on your action plan applies as a total.

    If one of you is a household member who is not qualifying then the action plan is for that one person.

    #77103
    TTrumble
    Member

    Hello @buharyaw,

    If your savings have already met the Payment Shock requirement prior to your intake appointment, they can indeed be counted toward your Payment Shock requirement. What sometimes confuses people and trips them up is that you must continue to save the Payment Shock each and every month without fail until you close on your home.

    In short, based on what you have written, you have met that requirement with regard to getting qualified. Just keep saving, check that item off the list and focus on meeting all the other requirements for getting qualified.

    Tim Trumble
    Online Operations, NACA

    #77307
    hernandezcrystal
    Participant

    When looking at payment shock. Does NACA look at all accounts I have? So I have 1 checking account and 4 savings accounts. All of my expenses come from my checking account and 2 of my saving account have funds going into them each month. The other 2 saving accounts are non activity accounts (both have the payment shot amounts needed) and I have not had funds go into them recently. My payment shock is currently available across all saving account and will be moving forward. In order for me to meet payment shock must I see that increase across all accounts even if saving account funds meet the payment shock requirement currently?

    #77308
    Nelsont
    Member

    Every account. Period.

    FYI your savings accounts you mention do not have the payment shock. This is a common misconception. Maybe they have the MRF.

    MRF is a minimum total you need to qualify which is approximately what it will cost to buy the house without using buy down (if you use buy down your MRF will increase by that amount). Once you reach your MRF you’re good.

    Payment shock on the other hand never ends. It can be seen as a phantom mortgage payment. From the day you start naca to the day you close on your house you need to demonstrate payment shock every month. This is not a finite total to reach. In most cases your mortgage will be more than your rent. You need to show you can pay that higher mortgage amount. Any month you can’t is the same as missing a mortgage payment. It does not matter that you saved extra because that’s not how mortgage payments work.

    So add up your 4 accounts. What is the total? In December that total needs to be at least November total + your payment shock. Then December total + your payment shock and so on.

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