I first heard about NACA last week. Over the weekend I spent much time reading on their website about the NACA program. And, today I went to an agent workshop wondering, "What the heck is the catch?"
The program on it's face offers a home loan on purchases up to $200,000 with no money down and no closing costs at a below normal fixed rate. They particularly care about credit scores, so it neither helps you to have a good score nor hurts you to have a bad score. There's no prepayment penalty and no private mortgage insurance. So just what IS the catch?
Well, there are a few things that one should know before using a NACA loan to purchase a home. First, you must live in the house for the entire time that you have a NACA loan on the property. Next, you won't ever be able to get a second mortgage (such as a Home Equity Line of Credit) as long as NACA has the loan on the house, because they won't permit a second lein holder. (If you wanted to convert the property into an investment property, you would need to refinance into a conventional loan out of the NACA loan.)
Oh, and remember I said there's no mortgage insurance? There is, however, a $50 per month fee that you pay. I think they could have come up with a better acronym for this fee which is NSF. It stands for Neighborhood Stabilization Fund. At the workshop they said that the homeowner pays this $50 fee for 5 or 7 years. I'd like to know exactly if it's 5 or if it's 7 years and how they determine when they remove the $50 charge. You also need to get a lot of documentation to them, but the purchase workshop appears to be designed to prepare you for the paperwork that you need to get together. And, you do need some money. While there are no closing costs you do have to have your prepaid items (insurance and taxes) and you'll need to pay for an inspection.
To summarize, I haven't found a "catch". It looks like a good program for anyone who is making a purchase up to $200,000. So, I'm going to try them out and see how it goes. Will keep you all posted. If you have had any experience with NACA -- positive or negative -- I'd love it if you would leave comments on my blog.
If you or anyone you know is looking to make a purchase up to $200,000 in the Baton Rouge area, let me know and I'll put you in touch with the right people to start moving toward your 4.875% loan with no money down. This looks like a good spot to advertise my new Google Voice number which is 225-341-BRLA (2752).
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