Well, I wrote a post earlier about this great loan program for anyone making a purchase under $200,000. Today, I'm writing to say that maybe it's not for "anyone". It is a loan program that has it's merits, but if you are a buyer who is qualified to do an FHA loan, NACA may not be the best route for you.
I was considering using NACA to purchase a new home for myself. I sent a friend of mine (with whom I'll be purchasing) to the NACA workshop. What I found out was a little disturbing. First of all, if you are responsible with your money, I doubt you will want to sit with one of their "mortgage consultants" who will go through your budget with you and coach you on fine tuning that budget. Secondly, I heard that they got into about FHA. At the workshop they talked about FHA being "loan sharks" and talking badly about the FHA program.
By what logic can anyone call FHA a loan shark? I mean it's a government backed program that offers a minimal down payment and lower mortgage insurance than a conventional loan. Plus FHA is more forgiving on credit scores than conventional financing. Sure, if you compare it to a $0 down, $0 closing cost loan, the no money down loan may be more appealing.
But let's all keep in mind that even if you have no money up front when you purchase the home, you're still paying for it in the long run - every penny of it.
There are those critics out there who diss the NACA program as well. They complain that if people have no money to put down then they shouldn't buy a home. And, while there may be some truth to this statement, it is my belief that everyone deserves a chance. And that's why I still think NACA is a good program. Because at it's heart, it is there to help people who really wouldn't have had any other method by which to purchase a home. That's a good goal. The credit counseling is a good part of this program, because the typical buyer who can't qualify for FHA probably needs the credit counseling.
So, if you are a buyer with poor credit, no downpayment, and you're willing to put some effort into making the dream of home ownership a reality - the NACA is the program for you. Agents: if you have a buyer who is qualified for an FHA loan already, they probably do not need NACA, and they may not want to spend the time to go through the program as it's a longer process than normal.
Summary: NACA is a good program for people who need it. And, quite frankly, I don't think NACA wants the people who have other loan options to come through their program.
I agree is a good program. Many are skeptical about it. But that's okay.
BTW, you can put a down payment and you can use the funds to buy down the loan. It's not like it's for people who has no money because they need to show the reserves in the bank. Plus payment shock too.
Good advice, it's always important to be as careful as possible.
Thank you for your honesty. Sadly, many who have no other alternatives rely on NACA and wind up losing homes and devasted because it is now run so very unprofessionally. They treat the poor, who need them the most, like second class citizens by not returning calls or updating files - it's very lowbrow. No reputable financial institution would or could get away with taking a membership fee, making you sign voter registration (I have voted for 20+ years and they made me sign again, do they get a kickback?) refusing to return calls or give updates and stringing clients along for months only to turn them down in the end. Their BBB rating is between C and F and people are now looking at avenues of redress with the authorities. It's great that they help forclosure victims and they do close mortgages but when you add the numbers up they amount they disappoint is disproportionate to the amount they help. The harm for some is catastrophic.
I understand the critics who say "If you have no money down on a home you shouldn't buy one" because owning a home is not all it is cracked up to be. In the first three years of owning my home...disaster after disaster happened and I had to spend around $30k to fix it all. Well I do make good money but for those that don't...having to get a new roof, plumbing, electrical, HVAC, stove, get trees removed could make you lose your house and you can't sell it broke. And if you don't fix it...alot more can go wrong in the long run. Maintaining a home is expensive and when the city decides to up your taxes to pay for the increases in city expenses you got to pay those increases too. The only one who will gain from homeownership is who ever inherits it. You will never reap any cost's from it during your life time other than having a roof over your head when you are too old to work to pay rent and most likely you will be 70 years before you stop workiing. Anyone paying into social security born in the 1970s or later will have to work til you are 70 ys old to reap full benefits of it and according to the lastest social security statement...we will only get $770 per every $1000 we have been promised and this could go down even more. If I could change anything I would never have bought a house. I'd rent really cheap and save all my money that I'd be throwing away on a house...then I'd slam it on a down payment and live modestly with little or no house payment. I'd probably have $150k saved by now which is more than enough to buy the house I am still trying to payoff. I'd rather pay the income taxes....b/c at the low interest rates....the tax break of owning a home doesn't get you any money back anyway. For those looking into a home really do your math.