10 Steps to Owning Your Home
This section describes NACA's comprehensive counseling and steps for purchasing a home through NACA. If you follow these steps, you will become a homeowner. The more preparation you do, the sooner you will be able to purchase your home. The overview below is followed by a detailed description of each step.
Step 1: Homebuyer Workshop
You must attend a Homebuyer Workshop. This is a free educational forum which is open to everyone prior to determining your status as a NACA Member or Non-Member. There are a number of workshops each month. The Homebuyer Workshop will provide you with an overview of the home buying process, real estate issues, and mortgage options including HUD mortgage programs and the NACA Mortgage. You will receive important information about becoming mortgage ready and NACA Qualified. Upon completion of the Homebuyer Workshop you should access your NACA Web-file to schedule an appointment with a NACA Housing Counselor. To make an appointment follow the steps described in your Web-file: submit required documents, complete information, sign Membership and Authorization, and pay your Membership Fee and credit report. If you are unable to complete this, contact the local NACA office or Member Services for assistance.
Sign up for a NACA workshop
Step 2: Housing Counseling & Homeownership Preparation
At your first meeting, the Housing Counselor will answer your questions about NACA and start your preparation towards homeownership. Your Housing Counselor will review your debt and other payments you make to determine if you are currently ready for homeownership or what steps you need to take. He/she will also help you determine a mortgage payment you can afford by reviewing your finalized comprehensive budget detailing your income and expenses. This budget will identify your potential available savings and the amount available for a mortgage payment. It will also identify opportunities for you to reduce your expenses providing additional funds for purchasing a home or for other items. You will receive an action plan that identifies any additional documents, information and next steps for you to become NACA qualified. After each counseling session you need to make a follow-up appointment until you are NACA Qualified.
Step 3: Mortgage Options & NACA Mortgage
In the Mortgage Options section, various mortgage products are described. The details of becoming NACA Qualified are also provided. NACA Qualification is required to access the NACA Mortgage. NACA Qualification is so extensive that it meets the requirements of many other mortgage products. Once you are NACA Qualified, you will need to continue to pay all accounts on time, maintain your income, obtain no new debt and save the difference between your current housing payment and future affordable mortgage (i.e. housing) payment each month, until closing. Also keep submitting the most current documents including but not limited to paystubs, bank statements, canceled checks for rental payments, etc.
Step 4: Housing Search
Once you are NACA Qualified, you will need to attend a Purchase Workshop which is held every Thursday from 6:00 p.m. to 7:30 p.m. at a NACA office. These workshops are required for all NACA Qualified Members who want to access the NACA Mortgage. You will be provided with information about beginning the home purchase process; identifying properties; addressing repair issues; obtaining NACA Credit Access Approval; submitting your NACA Mortgage loan application; processing the mortgage application; and obtaining NACA's post-purchase assistance. You will receive your NACA Qualification Form and can begin searching for the home of your dreams. Since you want to find a home that is within your NACA Qualification and meets your needs and desires, it is important that you have not already committed to a particular house. Your NACA Qualification is valid for 6 months. Therefore it is important that you use this time to search for your home since you would need to be re-qualified after 6 months or before if your circumstances changed to ensure that you are still qualified and your maximum mortgage payment has not changed.
A NACA Buyer's Agent or an agent referred to you by NACA will be available to assist you in finding a home that you can qualify to purchase through the NACA Program. If you were directed to NACA by a real estate agent, you will be referred back to that agent. You may use any real estate agent of your choice unless the agent has been removed from the NACA program for actions NACA has determined to be harmful or otherwise problematic. Your agent should attend the free training the first Tuesday of each month if they have limited experience working with NACA.
If you choose to use a NACA Buyer's Agent or Referral Agent, he or she will meet with you to discuss where you wish to live, what type of house you want, the price range you are considering and other issues of concern to you. You need to take your time in finding your desired property, since you will be responsible for any current or future repair issues. Your agent will help you locate suitable properties, including the ones identified by you. Once you find your desired home, you must immediately contact your Housing Counselor to obtain a Property Qualification Letter which verifies you are qualified to purchase this property. Your agent will then negotiate on your behalf the terms of the Purchase and Sale Agreement. He or she can advise you on the amount to offer, but you must decide if the house is right for you at that price. The agent can also help you negotiate what renovations may be necessary as well as whether and how the seller can assist most effectively in making repairs or if the cost of repairs will be included in your mortgage.
Step 5: Purchase & Sale Contract
The Purchase and Sale Agreement (P&S) is a very important contract â€“ it binds you and the seller to execute the transfer of the home at an agreed price under specific terms. You need to negotiate with the seller/listing agent who will be responsible for any repairs, determine the amount of any seller funds for repairs to be included in the mortgage amount, any seller contributed funds to buy-down the interest rate, and then execute the Purchase and Sale contract.
Prior to signing the contract, you need to contact your Housing Counselor and provide them a copy of the MLS and the amount you are considering to offer the seller to confirm if the property is within your maximum purchase price, which may change due to interest rate shifts. You also might need to contact your Housing Counselor if you need to be re-qualified with updated information, if your NACA Qualification has expired. After careful consideration, you can accept this very important contract by signing it. NACA does not accept P&S Agreements signed electronically by the buyer. The seller may provide an electronic signature.
Since you are responsible for paying any penalties arising from a P&S Agreement, regardless of the actions of NACA or the lender, we strongly recommend that your contract adhere to the guidelines below, to minimize the likelihood of additional costs. The following items should be addressed in your Purchase & Sale Agreement:
Eliminate from your P&S Agreement:
- Charges or penalties for closings past a certain number of days from the executed contract (per diem);
- Loss of your earnest money deposit if the property does not appraise for the purchase price you agreed to; and
- Loss of your earnest money deposit if your mortgage application is denied.
Include in your P&S Agreement:
- Correct spelling of your name; the same way it was entered on your NACA documents or as it appears on your picture ID;
- Conditions requiring satisfactory NACA-approved home and pest inspector(s); this includes time to turn on utilities and undergo other evaluations or work write ups if it requires a major renovation;
- At least 30 days to close from the date of the executed contract;
- At least 45-to-60 days to close for properties requiring significant renovations, as identified on the home inspection, from the date of the executed contract;
- Approved NACA and lender settlement agent to provide settlement services;
Note: when using an approved settlement agent, the participating lender pays the settlement agent's fees and closing costs; however, if you request another settlement agent, he/she must be approved by both NACA and the lender and you are likely to incur significant additional costs.
- Closing at a NACA office, a process which ensures that you have the support necessary to address issues that may delay or prevent a closing as well as to answer questions about loan terms and other matters.
Step 6: Property Condition
Once you select a property for purchase, it must be inspected by a qualified NACA-approved home and pest inspector(s) to determine the overall condition of the home you wish to buy. Just as you must qualify for a mortgage payment you can afford, the property you want to purchase must undergo an inspection review process to determine the home's condition in order to assess its suitability. Existing repair conditions such as code, safety, health, structural, mechanical systems and preventative maintenance needs often require correction in order for the home to qualify for purchase. NACA's Home and Neighborhood Development (HAND) department works with you to assess property conditions and assist in addressing required repairs. You can review more information about the HAND repair and rehab process on pages 51 through 57.
Step 7: NACA Credit Access & Bank Application
Since you have identified your property, time is of the essence to submit your bank application in order to close by the deadline agreed to in your Purchase and Sale contract. It is now crucial to meet with your Mortgage Consultant to be approved for NACA Credit Access which requires verification that you are still NACA Qualified. Approval of NACA Credit Access will allow your licensed Housing Counselor to complete your NACA Mortgage application and submit it to a participating lender. NACA has full discretion in approving NACA Credit Access which you can apply for at any time during the home buying process with the approval based on meeting the requirements listed below. If you are denied, NACA will provide you with the reason for the denial.
This verification for NACA Credit Access includes the following:
- Required savings is maintained (i.e. Payment Shock)
- Income is not reduced
- Debts are not increased
- Payments continue to be made on time
- You adhere to other NACA requirements
You need to submit following current documents and financial information including:
- Executed Purchase and Sale Contract, directly or by fax, to your Housing Counselor. Your real estate agent can also submit your executed purchase and sale through the NACA website.
- Recent 30 days paystubs
- Recent 90 days of bank statements for all accounts
- Updated canceled checks to verify on time rental payment since qualification
- For Self-Employment income - most recent 12 months bank statements
Step 8: Mortgage Processing And Underwriting
NACA's Underwriting and Processing Departments will facilitate the underwriting and processing of your loan at the lender. There should be few conditions on your mortgage since any lender issues would have been addressed at NACA Qualification and addressed prior to the time the mortgage application was taken. Because of all the pre-application work, participating lenders approve virtually all mortgage applications. During this time period, you should begin looking for homeowner's insurance and provide proof of insurance as well as finalize all bids and the rehab budget. You must also do a â€œwalk-throughâ€ of the property just prior to closing to make sure that there is no new damage, that the property is vacant and clean, and that you are satisfied with any agreed upon repairs. The property must be vacant at time of closing or we cannot schedule the closing.
Step 9: Mortgage Closing
NACA and the Settlement Agent will coordinate your closing on a NACA Mortgage at a NACA office. You will be advised about all costs (such as pre-paid taxes, pre-paid insurance, etc.) due at the closing and any other required items. You will need to bring a certified check, made out to the settlement agent, for these costs. Just prior to the closing, examine the property to make sure all arrangements involving repairs, tenants, cleaning, etc., have been followed.
Your closing at the NACA Office will involve you and any co-borrowers, as well as the seller, the lender's attorney or settlement agent, your attorney (if applicable), your real estate agent, and the listing agent. You will have to sign a mortgage, a promissory note, and many other papers. If you have any questions or problems, your real estate agent, Housing Counselor or another NACA staff person can help to answer or address them. You should not agree to close or sign any documents unless you are 100% satisfied with all agreements and understand what you are signing. At the end of the closing, you will own the property and receive the keys.
Step 10: Post-purchase Program (Membership Assistance Program - MAP)
Once you have closed on a NACA mortgage, your NACA membership provides you with a post-purchase assistance program through NACA's Membership Assistance Program (â€œMAPâ€). MAP has trained and specially dedicated staff ready to provide comprehensive counseling to prevent financial difficulties and, where necessary, to get you back on track.
Making the transition from renting to owning may require significant sacrifices and changes in your spending habits. You will probably incur higher utility costs than in a rental property. You will no longer be able to rely on a landlord to arrange necessary repairs. You will need to make your mortgage payments on-time and, if you miss a payment, the lender will expect two payments the next month. Although your NACA Housing Counselor will discuss these issues with you throughout the NACA Qualification process, post-purchase counseling may be needed to help you adjust to the financial responsibilities of being a homeowner.
NACA provides Members with comprehensive post purchase assistance. Thus, instead of private mortgage insurance, which provides no benefits to the homeowner, the NACA membership which is free to the Member after closing, provides free assistance for Members having difficulty making their mortgage payment.
The assistance described below is provided to you as long as you have the NACA mortgage:
- Budgeting and other counseling;
- Modifications to address changed financial circumstances (i.e. reduced income);
- Forbearances to address temporary financial difficulties;
- Financial assistance for approved homeowners that encounter financial difficulties;
- Real estate services to sell your home;
- Communicating with or addressing issues with the lender;
- Additional homeowner and neighborhood services and advocacy; and
- Other services that becomes available through NACA.
NACA is working to provide other types of assistance and services for NACA homeowners. These services may include legal services and access to other financial products.
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