The One Easy Thing you must do Before Buying a House

When I look back a few years, I remember the feeling: disheartening, guilt, fear. I was forty, and yet, I had not acquired the most important adulthood badge: homeownership. As a single mother on a fixed income, the dream crumbled in front of my eyes. I went to the bank, hoping that an FHA loan would allow me to buy a house. That day I went back home and cried my eyes out: I could not afford to buy a house, not even with the most affordable of loans. I had no money for a downpayment, even for one as low as the FHA loan required. I couldn’t understand why even though I never failed to make a rent payment in my life, I was considered unworthy of buying my own house.

Then, one day, searching for options, though I thought there were none, I found it: The Neighborhood Assistance Corporation of America (NACA). I don’t even remember what made me look at their website, but there it was: a non-profit organization that helps people buy a house without a downpayment, without fees or closing costs. All I needed to do was present proof that I could keep up with my monthly rent. They also offer assistance for people facing foreclosure to retain their homes. They had recently opened their Detroit office, so I decided there was nothing to lose by signing up for their information session. So I did. A few months later, I was a homeowner with a fixed mortgage below market rate and payments that I could afford comfortably. Because the monthly payments on my mortgage were about half of my rent, I was able to help my son get an apartment with a couple of roommates when he went to college. This was the real deal.

The one thing you should do if you are planning to buy a home is to check out the NACA website before taking any other lender options.

Let me give you a summary of how it works.

First of all, you need to know that the house you will buy has to be your primary residency. It is not a way to buy a second home or buy real estate to flip or rent it to others. The conditions of the loan do not allow it.

You must be buying a certain level of housing. NACA is a non-profit organization that aims to help people secure housing, not purchase luxury homes. But, depending on your monthly income, the maximum purchase price can be pretty decent. I took a look at the mortgage estimator tool on the NACA website and found out that the current loan upper limit is 484,350.oo dollars in most states. In areas that are considered high cost, that limit can go up to 726,525.oo dollars.

You would only get the maximum purchase price loan if you can pay it. The organization will not grill you because of your credit history or bad credit score, but they will examine your ability to pay. Then they will offer you an estimated loan amount. That amount may be lower than what you expected as it happened to me. It turned out I could only pay comfortably for a house about half the price I initially thought I could. That was a wake-up call. Had I got a regular mortgage with a bank, I would probably be writing now about foreclosure proceedings.

For married couples, the house must be the only home owned by either of them. Keep in mind that if your legal spouse owns a house, you are considered a homeowner and, therefore, ineligible for this kind of loan.

You will have to be patient: NACA is a non-profit organization, and therefore depends on a small number of employees that stretch themselves very thin and some volunteers to do things like phone calls and such. They do not have the human resources and rewards programs that banks have, so your process will take longer than it would do at a regular lender, but is worth every minute.

You will be required to put some escrow and cover some small costs that will be detailed to you before accepting the loan, but that is almost negligible compared to a whole downpayment. My escrow was 2000 dollars, and the day of the closing, I got something like 1300 dollars back. So, in the end, all I needed to buy my house was about 700 dollars. At the time this piece is written, the interest rate they are offering is a fixed 2% APR on a 30 year mortgage. It doesn't get better than that.

And one more thing: if you look at the NACA website, you will see that they are currently very active in the pursuit of racial and social justice. So, if you are a single mother of color or just a human being living in America who could use a hand to buy a house, take a look at this organization. It may be just what you need. I know it was for me. You can find this big, open helping hand at naca.com.