STEP 1: NACA WORKSHOP

The first step in the purchase process is to attend a NACA Homebuyer Workshop which is open and free to everyone. There are a number of workshops offered every month through each NACA office and elsewhere throughout the country. The NACA Workshop will provide you with an overview of NACA’s homeownership program and mortgage options including the NACA mortgage.

The focus of the workshop is to be NACA Qualified, or mortgage-ready. Upon completion of the NACA Workshop, you can schedule an appointment to meet with a NACA counselor. Within a few days of the workshop, you will receive your NACA ID and temporary password in two separate emails. You will then be able to access your NACA Web-File and begin inputting information and documents through the web-submission process. Through your Web-File you can make a counseling appointment for a face-to-face meeting or by phone. You can also make an appointment by calling the local office a week after the workshop.

STEP 2: PREPARATION

Prior to beginning your first counseling appointment with a NACA counselor (Intake Session) you need to submit your signed Authorization and Membership Agreement. If you decide to become a NACA Member you must pay the annual NACA Membership Dues of $20 for the household. Both Members and Non-Members receive counseling while Members have exclusive access to the NACA mortgage and other benefits and both must pay NACA’s cost of obtaining your credit report.

Prior to your initial counseling session and throughout the process, you need to submit your data and documents to your counselor. This should be done through your Web-File where you can submit them by fax utilizing your personal fax cover sheet, use your NACA ID (i.e. “email(Member ID)@nacalynx.com”). By completing this information your counselor will have a more complete file to effectively evaluate your situation and assist you faster. If you have difficulty in submitting the information, your counselor can input it during your counseling session. If you have not submitted your data and documents prior to the counseling session and you do not come prepared to your session, we may need to reschedule your appointment.

Web-File Submission:
Your Web-File identifies the information and documents you need to submit prior to your counseling appointment. You have three very effective ways to directly submit your documents into your personal electronic file.

1. Fax: Fax your documents using your personalized fax cover sheet.
2. Upload: Upload your documents from your local computer.
3. Email: Email by attaching your documents to your personalized email.

Make sure by submit the following documents for you and any co-borrower(s) into your electronic file or bring them with you for your counseling appointment.

• Pay stubs (last four weeks)
• Bank statement for all accounts (last three months or if self-employed last 12 months)
• W-2 (last two years)
• Federal Income Tax Return (last two years)
• Credit Card and Loan Statements (most recent)
• Budget – Financial analysis by identifying your monthly income, liabilities and expenses
• Picture ID

STEP 3: NACA QUALIFICATION

NACA provides free personalized and comprehensive counseling to address your particular credit and financial issues and help determine a mortgage payment you can afford. NACA’s counseling and mortgage qualification criteria are based on your individual circumstances not credit scores. This enables us to fulfill our mission of assisting working people who otherwise do not have access to an affordable mortgage. Consequently, the vast majority of NACA Members are low- to moderate-income with many having neither perfect credit nor substantial savings.

At your first counseling session, your counselor will answer your questions concerning NACA and discuss the issues related to homeownership. Your counselor will help you prepare financially for homeownership by obtaining the necessary documents and information, determining an affordable payment and addressing any roadblocks to homeownership. Most importantly, you need to complete a comprehensive budget detailing your income and expenses. You should bring the completed budget from your workbook or if necessary complete it later. Preparing the budget will provide you with an analysis of your finances and opportunities to make adjustments to address potential barriers to obtaining a mortgage. Your budget helps determine a mortgage payment you can afford as well as how to better manage your finances. Your counselor will do an action plan identifying what additional documents and information you need to become NACA Qualified. He/she will work with you for as long as it takes to qualify you for a mortgage that best meets your needs.

You must be NACA Qualified to access the NACA Mortgage. NACA Qualification is so extensive that it meets the requirements of many other mortgage products which your counselor can discuss with you. Once you are NACA Qualified, you will need to pay all accounts on time, maintain your income, obtain no new debt and save the difference between your current rent and desired mortgage payment each month, until closing.

To become NACA Qualified, your counselor will work with you in the following areas:

• 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 that were out of your control.
• 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?
• Payment Shock: Have you saved the difference between your rent and future mortgage payment? Payment Shock savings is crucial in determining an affordable mortgage payment.
• Affordability Analysis: Do you want to purchase single or multi-family property? What mortgage payment you can afford and determining your maximum purchase price?

You should research government programs that provide additional assistance in purchasing a home. This could include purchasing government subsidized or built affordable properties, down payment assistance and buy-down assistance. One of these grant opportunities is through NACA. NACA’s participating lenders provide additional funds for low and moderate income (“LMI”) buyers and buyers purchasing in LMI communities to permanently buy-down the already below market NACA interest rate. Discuss this additional assistance with your counselor.

STEP 4: PURCHASE WORKSHOP

Once you are NACA Qualified, you will need to attend a Purchase Workshop which is usually 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 on: identifying properties, addressing repair issues, requirements for submitting a mortgage application (i.e. obtaining NACA Credit Access Approval), processing the mortgage application; and obtaining NACA’ post-purchase assistance through NACA’s Membership Assistance Program (“MAP”). 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 Maximum Mortgage Amount and meets your needs and desires, it is important that you have not already committed to a particular house. You will also get access to properties that lenders own (i.e. REO properties) and can be purchased on very favorable terms.

You would usually begin the housing search with a real estate agent. NACA would provide you with an opportunity to work with a NACA’s Buyer Agent or NACA Referral Agent who understand the NACA program and will represent your interests. S/He can help you find a home you can qualify to purchase through the NACA Program, help you determine what renovations might be necessary, and how to most effectively utilize the NACA mortgage. If you were directed to NACA by a real estate agent who adhered to the process, 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 in the local NACA office if they have had limited experience working with NACA.

STEP 5: PURCHASE & SALE CONTRACT

Once you find your desired home, your real estate agent will negotiate on your behalf the purchase amount and the terms of the Purchase and Sale Agreement (P&S), but you must decide if the house is right for you at that price. The P&S is a very important contract – it binds you and the seller to execute the transfer of the home at an agreed price with specific terms. Prior to signing the contract, you need to check with your counselor to confirm your Maximum Mortgage Amount, which may change due to interest rate shifts You may need to be re-qualified with updated information if it has been greater than 120 days since your were NACA Qualification. Also verify that the purchase price is within the NACA maximum limits for the area (shown by zip code on NACA’s webpage). 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 P&S Agreement:

Eliminate from your P&S Agreement:

1. Charges or penalties for closings past a certain number of days from the executed contract (per diem);
2. Loss of your earnest money deposit if the property does not appraise for the purchase price you agreed to; and
3. Loss of your earnest money deposit if your mortgage application is denied.

Include in your P&S Agreement:

• Conditions requiring satisfactory NACA-approved home and pest inspector(s);
• At least 30 days to close from the date of the executed contract without significant renovations;
• 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, so that you have support 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 ISSUES

Since you will be responsible for any repair issues, the house you select must be inspected by qualified NACA-approved home and pest inspector(s) to prevent serious problems or unpleasant surprises. Property inspections are crucial to help you avoid unexpected expenses arising from known or potential property defects or arising from safety, health, code, structural, mechanical, electrical, systems problems or other issues. You are responsible for selecting the inspector(s) from the NACA-approved list or may select another inspector who must be approved by NACA (approval may delay the process).

Your inspector(s) will provide you with a written report, which contains valuable information such as identifying necessary or future repairs, information on utilities and offering tips to improve energy efficiency. This will help you avoid a house with serious problems or unpleasant surprises. It will also assist you in negotiating a price reduction or the seller contributing money towards repairs if there are inspection issues.

Once the property inspection(s) are complete, NACA will establish a NACA repair list which require some or all repairs to be completed. You and your real estate agent should present the repair list to the seller. If repairs are needed, they must either be made by the seller prior to closing, from funds provided by the seller, from a government entity, or financed as part of the mortgage and completed after closing. You should use the following options to address needed repairs:

• Negotiate to have the seller complete some or all of the needed repairs with licensed contractors (the work must be re-inspected after completion and prior to closing to verify they were properly completed);
• Negotiate the best price, use seller-contributed funds for a buy-down, and add the cost of repairs into the total mortgage loan;
• Include the cost of repairs into the total mortgage amount. The total mortgage amount cannot exceed 110% of the home’s appraised value or exceed the Maximum Purchase Price. The Mortgage amount includes the purchase price, rehab amount and six months of potential mortgage payments, if unable to occupy the property during renovation.

It is often most effective for the rehab funds to be part of the NACA Mortgage, since you will be responsible for the quality and completion of the repairs with the assistance of NACA’s Home and Neighborhood Development Department (”HAND”). If you choose this route, HAND will help you solicit and evaluate bids from contractors from which you need to select and approve and also being subject to HAND approval. The portion of the mortgage that is set aside for the repairs to be completed after the closing will be held in escrow. If substantial renovations prevent you from moving into the property, the mortgage payments for the first six months will be incorporated into your loan with the lender reducing your interest rate to have your monthly affordable payment remain the same (i.e. the lender is paying the cost of the six months of mortgage payments by permanently reducing your interest rate by three-eighths of a percent). HAND will authorize disbursement of the funds from the escrow account upon completion of the identified repair items and a re-inspection of the property to verify the quality and completion of the work.

STEP 7: NACA CREDIT ACCESS

Provide a copy of the executed Purchase and Sale Contract, directly or by fax, to your counselor or other NACA staff, along with updated documents and financial information, to apply for NACA Credit Access. Your real estate agent can also submit your executed purchase and sale through the NACA website. To obtain the NACA Mortgage, you need to be approved for NACA Credit Access which requires verification that you are still NACA Qualified. This verification includes the following: 1) Required savings is maintained (i.e. Payment Shock); 2 Income is not reduced; 3) Debts are not increased; 4) Payments continue to be made on time; and 5) You adhere to other NACA requirements. NACA has full discretion in approving applications for credit (i.e. NACA Credit Access) which you can apply for at any time during the home buying process. Approval of NACA Credit Access will allow your licensed counselor to complete your NACA Mortgage application and submit it to a participating lender. If you are denied, NACA will provide you with the reason.

STEP 8: MORTGAGE PROCESSING AND UNDERWRITING

The licensed counselor takes your mortgage application which is submitted electronically and registered with a participating lender. NACA’s Underwriting and Processing Departments will facilitate the process including addressing appraisal, title and any lender conditions. There should be few conditions on your mortgage since any lender issues would have been addressed at NACA Qualification and prior to the time the mortgage application was taken. Because of all the pre-application work, participating lenders approve virtually all mortgage applications. If the property requires repairs, you need to verify seller repairs and for renovations after closing you need to have an approved contractor(s) with agreed upon work and costs. You need to focus on the repairs process through HAND, since this could significantly delay the approval and closing. Also during this time period, you should begin looking for homeowner’s insurance and provide proof of insurance.

STEP 9: MORTGAGE CLOSING

Prior to the closing, you will need to obtain home owner’s insurance. Remember that there is no downpayment and the lender pays all the closing costs and fees. You are only responsible for pre-paid expenses and escrows. 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, you must also do a “walk-through” of the property to examine it to make sure there is no new damage, that the property is vacant and clean, and that you are satisfied with the agreed upon repairs. The loan should now be ready for closing.

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, counselor or another NACA staff person can help to answer or address them. At the end of the closing, you will own the property and receive the keys and MOVE IN!
CONGRATULATIONS!

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 (“MAP”). MAP has trained and specially dedicated staff ready to provide comprehensive counseling, financial assistance and other services to prevent and address potential foreclosures and financial difficulties.

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 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, NACA provides assistance for Members who are having difficulty making their mortgage payment.

The assistance below is provided to you as long as you have a mortgage through NACA:

• 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;
• Landlord training and assistance;
• Real estate services to sell your home;
• Communicating with or addressing issues with the lender;
• Additional homeowner and neighborhood services and advocacy.
• Other services that becomes available through NACA.

NACA is working to provide other assistance and services for NACA homeowners. These services may include access to other financial products and additional services.

For more information visit www.naca.com