TEN STEPS TO A NEW HOME
The NACA home buying process helps hundreds of families throughout America purchase homes each month. We take the time to work with you every step of the way, to ensure that you find a home you want at a price that you can afford. 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. At each step you can access a detailed description of each step (where and how?). Best of all, NACA’s workshop and counseling services are free for NACA Members.
STEP ONE:
NACA Workshop
You must begin the process by attending a workshop which is open and free to everyone. There are a number of workshops offered every month by each NACA office. The NACA Workshop will provide you with an overview of the home buying process, real estate issues in your area, and NACA’s Best in America Mortgage Program. You will receive important information on becoming NACA Qualified, or mortgage-ready. Upon completion of the NACA Workshop, you can schedule an appointment to meet with a NACA Mortgage Consultant. Sign up for a workshop today!
Once you attend the workshop, you will receive an email with your NACA ID Number and your personalized Fax Cover Sheet. You will need to use your NACA ID Number for submitting information online and your Fax Cover Sheet, (which has your NACA ID Number already on it), for faxing documents to NACA. This procedure ensures that your documents are directed immediately into your personal electronic file.
Prepare for your first meeting
Prior to your meeting with your Mortgage Consultant, you should complete and submit as many of the below documents as possible. Your Fax Cover Sheet is essential because it automatically directs your faxed documents into your electronic file. Fax the documents to 1-877-Fax-NACA (1-877-329-6222). Thus, your Mortgage Consultant will have a more complete file to evaluate your situation and assist you in a timely manner, making for a much more effective counseling session. The more information and documentation you submit, the faster and more effectively we can meet your needs.
- Budget
Complete the Budget in the Member section of the NACA website identifying your monthly expenses, liabilities, and income. The Budget provides an analysis of your current financial situation. If completed accurately and completely, it will show the mortgage amount you can afford. Once completed, select Submit and the information will be loaded into your file.
- Qualification Information:
The following information needs to be completed during your initial counseling session. You should do your best to complete the information in the Member Section of the NACA website so you can move quickly through the NACA Qualification process:
- Employer Information
- Landlord Information
- Bank Information
- Qualification Documents:
Provide as many of the following documents to your Mortgage Consultant using your Fax Cover sheet.
- Membership Agreement
- Authorization
- Bank Statements – last three months
- Pay Stubs – last 30 days
- Items listed on your Task List
If you are not sure or comfortable on utilizing the website to input your information or faxing the documents, bring whatever you have to your counseling session. Your Mortgage Consultant will then manually enter the information into your file.
In addition, you will need to pay for the credit report and your Membership Dues at your first counseling session ($10 for each credit report and $20 Membership Fee for the household, payable in cash or with a personal check), and provide a photo ID.
STEP TWO:
NACA Qualification.
Your Mortgage Consultant will help you prepare financially for homeownership by obtaining the necessary documents and information, determining an affordable payment and addressing any roadblocks to homeownership. The Mortgage Consultant will work with you for as long as it takes to qualify you for a mortgage, locate and purchase your home.
To become NACA Qualified, your Mortgage Consultant will work with you in the following areas:
- Affordability Analysis: What type of house do you want to purchase and what is your desired price? Can you afford the mortgage payment for this desired price?
- Applicant Information: Do we have complete information on all the people who will be on the mortgage application and who will live in the house?
- Payment History: Do you have a history of meeting your financial obligations? We look at your current payment history and your written explanations for late payments.
- Debts: What are your current debt obligations, and which additional ones may you become obligated to pay?
- Income: Do you have documented income for the purchase of a property? Income can include employment, self-employment and other documented income.
- Funds Qualification: Do you have adequate cash or cash equivalents to pay for the earnest money deposit, home inspections, pre-paid closing expenses, and reserves?
STEP THREE:
Housing Search
Once you are NACA Qualified, you will be provided with information on: identifying properties; addressing repair issues; requirements for obtaining NACA Credit Access Approval and submitting a mortgage application; processing the mortgage; and NACA’s Membership Assistance Program. You will receive your NACA Qualification Letter and Form and can begin searching for the home of your dreams.
NACA's Buyer Agents and Referral Agents understand the NACA program and will represent your interests. They work for you to find a home you can qualify to purchase through the NACA Program. They will help you find a house where you wish to live below the Maximum Purchase Price, and negotiate the purchase with the seller. He or she can also help you determine what renovations might be necessary, and whether and how the seller can most effectively assist, or whether the cost can be included in your mortgage.
STEP FOUR:
Purchase and Sale Contract
When you identify the house you want to purchase, your real estate agent will negotiate on your behalf. He or she can advise you on the amount to offer, but you must decide if the property is right for you at that price. The Purchase and Sale Agreement (P&S) is the most important contract—it binds you and the seller to execute the transfer of ownership at an agreed upon price with specific terms. Although your real estate agent will assist you in negotiating, you must carefully consider whether to go forward with the agreement. You must check with your Mortgage Consultant before signing to confirm that you are qualified for the contract price. The P&S must be contingent upon a satisfactory home inspection and other conditions. The P&S should provide you at least four weeks to obtain a mortgage commitment (more time than is usually needed).
STEP FIVE:
Property Condition
You need to hire a NACA approved home inspector to inspect the property and provide you with a written report containing valuable information such as necessary or future repairs, utilities and energy efficiency. This will help you avoid a house with serious problems or unpleasant surprises. The inspection could affect the amount you wish to pay for the house. If repairs are needed, they must either be made by the seller or from funds provided by the seller, buyer, government entities, or financed as part of the mortgage. Once the inspection report is uploaded onto the NACA website, it will be reviewed by the NACA Rehab Department called Home and Neighborhood Development (“HAND”).
STEP SIX:
Renovation
NACA also provides rehab assistance and administration through NACA’s Home and Neighborhood Development Department (”HAND”) (link: rehab). You and your real estate agent should present the repair list to the seller and have sufficient funds provided by the seller to complete the repairs once the transaction has closed. For the repairs to be completed by you, you will receive bids from contractors which you need to select and approve. The rehab may be done with funds from the seller, from you, or financed as part of the mortgage (link: property renovation) and held in escrow. If renovations prevent you from moving into the property, the mortgage payments for the first six months may be deferred (incorporated into your loan), and your interest rate will be reduced with your monthly payment remaining the same.
STEP SEVEN:
NACA Credit Access
After you and the seller negotiate and sign the Purchase and Sale Contract, you will need to provide updated documents to your Mortgage Consultant to show that your finances have been on track since you were NACA Qualified, and that you still meet NACA’s requirements. If these are met, you can submit an application to NACA for credit approval which occurs when you submit a mortgage application. NACA will be able to submit your mortgage application for mortgage processing and underwriting through the NACA program reflecting your NACA Credit Access approval.
STEP EIGHT:
Mortgage Processing and Underwriting
The Mortgage Consultant takes your mortgage application. The loan is then registered with the Participating Lender and the full loan package is submitted to NACA’s Underwriting Department. The loan is reviewed and held until any conditions are addressed and the appraisal and title are received. There should be no conditions since the work was done at the NACA Qualification stage and any issues were addressed prior to submission of the mortgage application. Once the application has been underwritten and all the documents are received, the file is submitted electronically to the lender. The loan should be ready for closing within five days of submission.
STEP NINE:
Mortgage Closing & Issues for New Homeowners
NACA and the Settlement Agent will coordinate your closing at the NACA office. Prior to the closing, you will need to obtain home owner's insurance. You will need to bring a certified check, made out to the settlement agent, for the pre-paid expenses and escrows. Just prior to the closing, examine the property (i.e. “walk-through”) to make sure there is no new damage and that 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, your real estate agent, Mortgage Consultant or another NACA staff person can help to answer them. At the end of the closing, you will own the property and receive the keys and MOVE IN! CONGRATULATIONS!
STEP TEN:
Assistance for NACA homeowners
NACA provides comprehensive post-purchase counseling and financial assistance through NACA’s Membership Assistance Program. It provides emergency financial assistance to prevent foreclosure as well as staff who can provide financial and budget counseling, payment plans, landlord training and other assistance in helping to avoid foreclosure.
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 an apartment. 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—if you miss a payment the lender will expect two payments the next month. Although your NACA Mortgage Consultant will discuss these issues with you throughout the NACA Qualification process, Membership Assistance Program may be needed to help you adjust to the financial responsibilities of being a homeowner.
Advocate for Economic Justice. You will now be able to fulfill your Membership commitment of participating in at least five actions and activities a year in support of NACA’s mission. There are numerous activities to take part in, including participating in demonstrations, advocating for legislation, volunteering in the NACA office, serving on a peer lending committee, and assisting new Members with the home buying process. Contact your local office or NACA’s national office at 1-888-297-5568 to discuss how you want to fulfill your commitment.
REMEMBER TO PARTICIPATE
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