December 17, 2019 at 11:41 pm #63329
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….December 18, 2019 at 12:37 am #63335
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.
December 18, 2019 at 6:32 am #63340
- This reply was modified 2 years, 9 months ago by msob24.
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.December 18, 2019 at 9:21 am #63342
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%?December 18, 2019 at 9:28 am #63343Peapod0609Member
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.December 18, 2019 at 9:57 am #63345
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.December 18, 2019 at 10:00 am #63346
@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.December 18, 2019 at 10:24 am #63347
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…
December 18, 2019 at 10:39 am #63349
- This reply was modified 2 years, 9 months ago by Nelsont.
@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…”?
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…..December 18, 2019 at 11:06 am #63350
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.December 18, 2019 at 12:36 pm #63355Peapod0609Member
@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.May 17, 2022 at 3:28 pm #79341KvwillzParticipant
Im newly approved for a NACA mortgage and I understand this topic has been discussed previously but it is now 2022. Can anybody give me any guidance on the buy-down calculation for a priority member?
As of today the interest rate is 4.375%
Thank youMay 17, 2022 at 3:43 pm #79345
1 point is 1% of the purchase price of the house which equals 1/6th % of a rate reduction. You are allowed 5 or 6 points of buydown yourself (including grants) and an additional 10 points from the seller.
This must be communicated before you make your offer because naca needs to underwrite it before the bank does. If you already under contract without buy down then you need to cancel your contract and start over in order to use buy down. If you do this you will lose your EMD.
Buy down funds can come from savings a gift or a grant. This is on top of your MRF. So you need MRF plus buy down.
For example a $100,000 house will cost you $1000 to lower the rate from 4.375% to 4.208%.May 17, 2022 at 4:15 pm #79347KvwillzParticipant
Thank you @Nelsont
Ok so if I understand this correctly:
Purchase amount- $465,000.
I would need 6 points totaling $27,600. That amount would reduce my interest rate from 4.375% to about 3.373%
The NACA website says each point would reduce the interest rate by 0.25%. I guess this needs to be updated?May 17, 2022 at 4:25 pm #79348
I have 27,900 but yeah the website needs to be updated. The new rule went into effect May 1, 2021.
You might be maxed out at 5 points. I think generally it’s 5 points but 6 might be allowed if you don’t trigger HOEPA which is essentially a calculation created by the federal government to prevent banks from lending bad loans. There comes a point where you can spend too much to get a loan.
- You must be logged in to reply to this topic.