NEW NACA terms effective May 2021 priority and non priority members

Home Forums Purchase Program NEW NACA terms effective May 2021 priority and non priority members

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  • #75045
    aldoxide
    Participant

    Anyone else had the chance to review the new NACA terms? Im seeking clarification. It seems non priority members will now be able to buy in non priority areas at a not so low interest rate. Non priority members could receive the new “improved” rate (as priority members) if they buy in a priority area. Feel free to pitch whatever you understood. Thanks!

    #75049
    RBJ619
    Participant

    Greetings @aldoxide,

    Can you share where you found the new terms?

    Thanks!

    #75066
    Angeljordan
    Participant

    Yes, please share where you found this information, my first intake appointment is in July, would love to have all my info before it possible. Thanks.

    • This reply was modified 5 months, 1 week ago by Angeljordan.
    #75068
    brooklynne
    Participant

    This was the email announcement:

    We have great news regarding substantial enhancements to make NACA’s Best in America mortgage even better. The major change is that low-to moderate-income Members and Members purchasing in lower income areas will receive a significantly lower fixed interest rate. Higher income Members purchasing in a higher income area will get a slightly higher interest rate. All NACA Mortgages will continue with no down payment requirement, no closing costs and with broad underwriting criteria reflecting the reality of working people. The below changes go into effect for all bank applications taken and submitted to Bank of America on or after Monday May 3, 2021. Read the below information carefully as it may affect your home purchase.

      Below Market Fixed Interest Rate:    
    We will have two interest rates which are still below the market rate for a conventional loan.

    Priority Members:
    Priority Members are low to moderate income Members or higher income Members purchasing in a lower income census tract. They receive a mortgage one percent below the market fixed rate: for example 2.125% 30-yr or 1.50% 15-yr using the NACA rate as of 4/12/21. This one percent below market rate is at no cost to the Member and the Member is not required to pay additional discount points to receive the reduced rate.

    •  Low – to Moderate -Income Members: Members who have a total qualifying income that is 100% or less of the median income in the applicable MSA where the Member is purchasing.

    •  Higher Income Members Purchasing in a Lower Income Area: Members who have a total qualifying income greater than 100% of the median income in the applicable MSA and are purchasing a home in a census tract with a Median Family Income that is eighty percent (80%) or less of the AMI of the applicable MSA. This is calculated utilizing FFIEC’s most recent data for a Median Family Income.

    Non-Priority Members:
    Non-Priority Members are higher income Members purchasing in a higher income area. They still receive a very competitive below market fixed interest rate: for example 3.125% 30-yr or 2.50% 15-yr using the NACA rate as of 4/12/21.

    •  Members who have at total qualifying income greater than 100% of the median income in the applicable MSA where the Members is purchasing and buying in a census tract with a median family income greater than eighty percent (80%)

      Aggressive Interest Rate Buy Down:    
    The NACA Buy-down is still an effective way of obtaining an affordable monthly mortgage payment or increasing the affordable purchase price. The Member may use his or her own funds or access other sources of funds from the public or private sector, including but not limited to seller contributions for an interest rate buydown as follows:

    •  For a 30-year mortgage, each one percent of the loan amount (i.e. one point) will permanently reduce NACA’s below market fixed interest rate by one-sixth percent (i.e. 0.167% or 16.7 basis points).

    •  For a 15-year year mortgage, each one percent of the loan amount (i.e. one point) will permanently reduce NACA’s below market fixed interest rate by one-quarter percent (i.e. 0.25% or 25 basis points).

    •  The maximum amount the Member may reduce the interest rate is five to six points, excluding seller concession and not exceeding the maximum federal HOEPA thresholds.

    We proudly roll out these enhancements effective for all bank applications submitted as of May 3rd 2021, making the NACA program even more affordable for low- and moderate- income Members and those purchasing in lower income communities. While the vast majority of Members will benefit, some higher income Members may be subject to a higher interest rate than at their NACA Qualification. Please use the NACA calculator at NACA.com to check the impact on your NACA qualficiation. We look forward to making your dream of affordable homeownership a reality with NACA’s Best in America Mortgage.

    #75071
    aldoxide
    Participant

    Thank you for posting Brooklynne.
    So as I understood it before this notice, non priority members were those with higher incomes than the 100% the median household income. We could only buy in priority areas, meaning in areas with households making less than 100% the median. Any areas designated 100% or more by the census data were simply not an option for non priority members (those making more than 100% median income).

    Now it seems these classifications will change. A member making more than 100% the median income could still be classified as a “priority member” if the member chooses to buy in a priority area designated 80% or less, but if the member chooses to buy in an area designated 80% or greater, then the member would be classified as non priority. So I wonder if this lifts the previous 100% cap area restriction for higher income members.

    If anyone knows or wishes to pitch in on these changes please feel free to do so

    • This reply was modified 5 months, 1 week ago by aldoxide.
    #75107
    aldoxide
    Participant

    Thank you for that explanation.cheers

    #75111
    sole8771
    Participant

    @TTrumble. I interpret your response as Non Priority Members now having the ability to purchase in census tracts where the median income is above 100%. Is this correct? So we can now buy in neighborhoods above 100% if we are Non Priority?

    #75115
    jbaby901
    Participant

    Hello Tim. I’m in a few NaCA Facebook groups where several NACA counselors and directors are stating that Non-priority members are still being restricted to purchasing in areas where the MSA is below 100%, however the letter from Bruce Marks as well as your comment here would lead one to believe that this restriction no longer exist. Could you please clarify whether the limitation is still in place or if Non-priority members can actually purchase in areas greater than 100% of the MSA and get the market rate once the new policy takes effect.

    #75117
    TTrumble
    Member

    Hello all,

    I goofed. Mea culpa.

    I misread something in the message from Mr. Marks and have since gotten clarification. Non-priority members are still limited to buying in a Census Tract with a median income below 100% the MSA median income. The rate will be higher for Non-priority members who buy in a Census Tract with a median income between 80% and 100% of that for the MSA.

    My apologies for any confusion I may have caused.

    Tim Trumble
    Online Operations, NACA

    • This reply was modified 5 months, 1 week ago by TTrumble.
    #75119
    sole8771
    Participant

    Thank you.

    #75120
    aldoxide
    Participant

    @TTrumble that is unfortunate for non priority members. It’s actually bad news

    #75121
    readytobuy21
    Participant

    With the new terms for buydown only being 1/6 % is it even worth doing the buydown. It seems as though one would have to have twice the amount to put an additional dent in the NACA rate. While the buydown will definitely reduce interest paid it seems like it would be a challenge unless you saved around 15k in addition to the MRF. My question- if you only had $6000 saved for buydown and the purchase price is 256k, would it make more sense to stick with the 1% given by NACA and just keep the 6k in an emergency fund?

    Thanks in advance.

    #75122
    aldoxide
    Participant

    Hello @readytobuy21 ,
    Every situation is different, but yes the buydown going from 1/4 to 1/6 per point is blow to the concept for sure. I would just keep the 6k from the example you provided. On other situations where amounts are more significant, I would just run numbers for different scenarios. And in those scenarios, consider the possibility of selling before the loan matures. This is a big factor because loans are almost all interest for the first 5 years.

    #75160
    LukesCaged75
    Participant

    So now when we buydown, instead of lowering the rate .25 it’s less? Rough…

    #75161
    Nelsont
    Member

    @LukesCaged75 Also keep in mind the naca rate for priority members will now be a full 1% below market. Historically there was no official gap between naca and market other than naca will be lower. Typically it was about half a percent or so. And during the first half of the pandemic the market rate actually dipped below the naca rate.

    Another thing to keep in mind is bank of America sets the terms and until 2018 naca also worked with citi who had similar buy down terms to the new bank of America terms.

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