Priority Member Maximum Buy-down Calculation

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  • #63329
    msob24
    Member

    I read a great thread regarding maximum buy-down. I just wanna see if my math is anywhere close to reality. Does this scenario make sense?

    Priority Member 80-90% of MSA. Home Price $539,000. Buyer Funds $50,000 + 2% Sellers Concession, TOTAL $60,780. 7% maximum buy down $37,730. This brings rate to 1.625% based on today’s rate (3.375%). It leaves an additional $20,050 after fees ($3000). New Loan Amount $518,950, Lender Match $20,050 buying down another 3.86 points or 0.965 off rate. Final rate of…..0.66% give or take. Am I anywhere close? This is more math than I’ve had to do in quite a long time. I feel like I’ve totally missed the mark. Any help would be appreciated….

    • This topic was modified 2 years, 5 months ago by msob24.
    • This topic was modified 2 years, 5 months ago by msob24.
    #63335
    msob24
    Member

    If my MSA is $124,000 but the area I’m purchasing has a 2019 Estimated Tract Median Family Income of $142,000 which number do I use to calculate whether my income falls below 80%? Also how does NACA calculate my income? Is it just 2019 or is it an average of my past two years? Also can a sellers concession be used strictly to buy down my rate? The more threads I read on this the more confused I get…I’m in NY btw and I’m looking to purchase in the 11747 zip code.

    • This reply was modified 2 years, 5 months ago by msob24.
    #63340
    Nelsont
    Member

    A few things. The tract is only for non priority members. 124000 is the number used to determine priority status. If your income is below 124k you can buy anywhere in the MSA. If your income is above 124k you can only buy in tracts where the income is less than 124k.

    That thread you read was great but the maximum loan amount for any home is 484k unless you live in a high income area where the ffeic has determined loan amounts to be higher. Check with ffeic to get an idea.

    As of right now you will not be able to buy down 7%. That could change. But the maximum is 5 points or a decrease of 1.25% from the interest rate.

    Also when buying down you cannot get 0.66 or 0.965. The rate fluctuates in 1/8% or increments of 0.125 and you can only buy down in increments of 0.25.

    26950 is right now the maximum amount that can be combined between you your seller and grants to buy down the interest on a 539k house if your area is defined by the ffeic as being high income and having a loan limit of 540k or more. All other funds beyond 26950 in that case will go toward principle reduction.

    #63342
    msob24
    Member

    I don’t get it, I mean I understand what you are saying but that doesn’t jibe with everything I’ve been told thus far. Why is it that I can only buy my rate down 5 points? Initially at my first workshop I was told if I’m a priority member I can buy the rate down as low as .125. A rate of 2.125 based on today’s NACA rate is still great comparatively, I’m not trying to complain too much but my wife and I have been looking based on a rate reduction well under 2%. This changes a lot for us. Will anything change on January 1? What happen to buying down to “virtually zero”? what happen to buying down 7%?

    #63343
    Peapod0609
    Member

    To add onto that, the $124,000 for your MSA is what you need to determine if you are a priority member or not. If you are below that number, you are a priority member. If you are at 80% or less of that number, you are potentially eligible for a grant from BOA that automatically reduces your interest rate by 0.50% right off the bat.

    And for your income they don’t really use an average, but they look at what you are making today.

    #63345
    Nelsont
    Member

    @msob24

    What you heard at the workshop was correct at the time. Unfortunately, due to a variety of unforeseen circumstances, Bank of America ran out of funding allocated for NACA members in late summer/early fall of this year. Bank of America and NACA are currently in contract negotiations and, according to @ttrumble, there are some big benefits headed our way but, cannot be mentioned at this time. Probably, I would guess, is some time in 2020 BOA and NACA will publicly announce their renewed partnership at which point we will be made aware. Until then though, the lender matching grant has been suspended, the automatic rate reduction for low income members (80% or below MSA) has been reduced from 1% to 0.5% and the maximum buy down has been limited to 5 points.

    #63346
    msob24
    Member

    @Nelsont thanks for the update. When you say 2020 do you mean when the calendar turns over or do you mean at some point in the year? We’re kind of in a sticky situation in that we’re being evicted from our rental house (through no fault of our own). We were looking to get this whole thing wrapped up by end of January.

    #63347
    Nelsont
    Member

    I really have no idea. I’m taking a stab with 2020 so yeah I mean at some point in the year.

    With that said if you put a contract in today you are probably looking at February/March before you can close but, if you are truly being evicted then you might not be able to go through with a home purchase…

    • This reply was modified 2 years, 4 months ago by Nelsont.
    #63349
    msob24
    Member

    @Nelsont can you explain what you mean by “if you are truly being evicted then you might not be able to go through with a home purchase‚Ķ”?

    I am truly being evicted, we’ve never missed or been late on a rental payment in the 9 years we’ve been renting. We’re being evicted because the house we rent isn’t a legal two family and the town caught my landlord so she’s giving us the boot. I’ve been NACA qualified, awaiting credit access. I’ll be attending a purchase workshop tomorrow. I hired an attorney who advised me to stop paying rent, I’ve been saving my entire rent plus payment shock for 3 months. We are ready to move…..

    #63350
    Nelsont
    Member

    You will probably have to get the legal documentation to show your land lord was at fault. I’m just guessing here again but, your situation does not sound like one that will go unquestioned by the underwriters.

    #63355
    Peapod0609
    Member

    @TTrumble mentioned that NACA’s agreement with BOA recently ran out for the buydown and as a result you can only buy down 5% of the loan, which is unfortunate. But it’s still a terrific interest rate that you likely can’t get with any other mortgage.

    And general rule of thumb which will definitely pertain to your eviction thing, when you are not sure what to do, supply as much documentation as you can find, and write letters of explanation explaining what happened. You can’t go wrong with documentation and LOE’s, really.

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