NACA Maryland Down Payment Assistance Program
Everything You Need to Know About NACA’s No Down Payment, No Closing Cost Mortgage Program
If you're looking to buy a home but struggling with the costs of down payments, closing costs, or high interest rates, you might want to explore the NACA (Neighborhood Assistance Corporation of America) mortgage program. NACA offers a unique opportunity for homebuyers by eliminating common barriers to homeownership. In this post, we’ll go over the pros, cons, and the process of applying for NACA's no down payment, no closing cost assistance program.
Pros of the NACA Program
Below-Market Interest Rates One of the biggest selling points of the NACA program is its incredibly low interest rates. As of now, NACA is offering rates as low as 4.75% for a 30-year fixed mortgage, which is significantly lower than the current market rate. If you're approved for the program, you may even be able to further reduce your rate by using seller assistance or applying for additional grants.
No Down Payment, No Closing Costs Most buyers are responsible for two major costs when purchasing a home: the down payment and the closing costs. With NACA, you’re in luck because both of these costs are covered. The down payment is rolled into the loan, and closing costs are covered by the lender (either Bank of America or City Bank). This can be a game-changer for first-time homebuyers or anyone who may not have the savings to cover these upfront costs.
No Mortgage Insurance Many mortgage programs, especially FHA loans, require mortgage insurance (PMI), which adds an additional monthly payment on top of your mortgage. NACA, however, does not require mortgage insurance, making your monthly payment lower and more affordable.
Potential to Buy Multi-Family Homes NACA isn’t just for single-family homes. If you’re interested in multifamily properties, you can purchase homes up to or over $1 million (depending on the area). What’s more, you can use the income from the other units to help cover your mortgage payments. This is a powerful way to build wealth, especially if you're looking to invest in rental properties.
No First-Time Homebuyer Requirement Unlike many government programs, NACA is not limited to first-time homebuyers. However, one important condition is that you cannot own any other property at the time of approval. This can be a great option for people who’ve previously owned homes but are looking to buy again.
Cons of the NACA Program
While the NACA program offers significant benefits, it also comes with some drawbacks that you should be aware of.
Longer Approval Process The approval process with NACA takes longer than traditional mortgages. You’ll need to attend a homebuyer workshop, meet with a counselor, submit your documentation, and wait for approval. For buyers with excellent credit and well-organized documents, the process may take a few months. But if you have credit issues or missing documents, the process could stretch out for a year or more. The biggest challenge? Scheduling all your meetings with counselors, who are in high demand.
More and Longer Contingencies NACA has stricter contingency requirements than traditional lenders. For example, you’ll need a 10-day inspection period and a separate 10-day termite inspection period. This can be a turnoff for sellers who prefer a quicker and simpler process. Additionally, the home inspection report has to go through NACA’s approval process, which can delay things further.
Longer Closing Times NACA typically requires a 40-day+ closing period, which is much longer than the 20-25 days it usually takes with traditional lenders. This longer timeline can be problematic in a competitive market, especially if you’re up against buyers who can close faster.
Wait Times for Pre-Approval Unlike traditional lenders, NACA doesn’t provide immediate pre-approval letters. If you find a property and want to make an offer, you’ll have to wait for NACA to review your documents and issue a pre-approval letter, which may take several business days. This is a major disadvantage if you’re trying to make an offer on a hot property over the weekend, as NACA offices are closed and the process can take until the next business day to complete.
How to Get Started with NACA
If you’re interested in applying for a NACA mortgage, here’s what the process looks like:
Attend a Homebuyer Workshop The first step in getting qualified for the NACA program is attending a homebuyer workshop, which covers the basics of the program and what to expect in the process.
Meet with a NACA Counselor After completing the workshop, you'll need to meet with a NACA counselor face-to-face for about 2 hours. During this meeting, the counselor will help you create a personalized action plan for purchasing your home.
Submit Your Documents After your intake session, you’ll receive a list of documents to upload online. These documents will be reviewed by NACA, and you may need to schedule a follow-up session to discuss any questions or issues.
Underwriting and Approval Once your documents are reviewed, your file will go through NACA’s underwriting process. Afterward, NACA will submit your file to the mortgage department for approval. You may need to provide additional information or documents before receiving final approval.
Is NACA Right for You?
The NACA mortgage program offers several attractive advantages, especially for those who need help with down payments and closing costs or are looking for a low-interest rate. However, the lengthy approval process and additional contingencies may make it a challenging option in a competitive market or for those who are looking for a quick turnaround.
If you're patient, organized, and willing to navigate a more detailed process, NACA can be a fantastic option to help you achieve homeownership with fewer financial burdens.
Have you had experience with the NACA program, or are you considering it for your next home purchase? Let us know in the comments below, or reach out if you have any questions!
Happy house hunting!
This blog post provides an easy-to-read breakdown of the program, highlighting both the advantages and challenges of working with NACA. Let me know if you'd like to make any adjustments or if you have additional details to include!
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