What is NACA’s New 15 Year loan ‘Freedom Mortgage’?

NACA 15 year loan is the best 15 year loan in the nation. Not only will you pay off your mortgage in 15 years instead of 30 years, the interest rate buy down feature is twice as powerful as the 30 year. each buy down point(1% of the loan amount) will buy your interest rate down .5% instead of the .25% it will with the 30 year. This means that you can typically get all the way down to 0.0625% fixed with your own money, as the 15 year rate currently is 3.25%(as of 3/21/17). This changes frequently.

The main drawback of the 15 year loan vs the 30 year is the monthly payment doubles. So if you are qualified for say 400k with a 30 year, your typically qualified for about 200k with a 15 year. We dont like to look at the “qualification purchase price max amount” we like to look at the monthly payment numbers. For instance, a 300k home with a $100/month HOA is going to have a higher monthly payment than a 300k house with no HOA. If the interest rate remained the same(lets say 3.75%) that would allow you to buy a home approximately $321k if the home had no hoa. Now the property taxes on that home may be slightly higher, but not much.

This is where crunching the numbers is very valuable, if your looking to get the most you possible can out of your home. It could be the biggest home for the money, or it could be achieving the lowest possible monthly payment.

Lets do some quick numbers on the 30 year loan. Lets say for instance you have been qualified for the max through the program, a 417k home. Lets say the starting interest rate is 3.75%, and the qualification amount is $2,375/month including insurance, taxes, and hoa. Lets say you have 30k saved for your home. It would be wise to use this money for interest rate buy down(remember down payment is not necessary). Lets say you buy down the max of 7 points= 1.75% off the interest rate, which leaves you with a interest rate of 2%, and a payment of $1,982/month. This would cost $29,190.

417k loan at 2% Interest Rate417k Loan Amortization Chart

Now lets compare these numbers to what you could get with the 15 year loan. That same 30k you have saved for the 15 year brings twice the interest rate buy down power. Not to mention each point costs less because the loan amount is going to be lower on the 15 year loan. Lets maximize what you could get with the 15 year loan based on your $2375/month qualification.

353k home, with a 0.0625% fixed interest rate including property taxes, insurance & hoa comes out to $2,374/month. This is of course because of the 0.0625% interest rate. This would cost about $24,710 to achieve, vs $29,190. Without interest rate buy down, your loan would be capped at about 280k. So not only are you not paying interest with the 0.0625% loan, your able to buy 73k MORE home, because less of the monthly payment is going to interest and more is going to principle.

353k 0.0625% Interest Rate Loan353k 0.0625% Amortization Chart

The scenarios to run with the 15 year vs the 30 year loan is endless. The value the 15 year loan brings because of the interest rate buy down is unbelievable!

Kristopher Fraley , Realtor

A few years ago a serendipitous event(purchasing a home through the NACA program with a 0% 30 year fixed interest rate) inspired me to become a licensed real estate agent in the DC, Maryland & Virginia area, and I love it! There is nothing greater than giving back and its a fantastic process that I feel lucky to participate in. With so many money hungry sharks preying on innocent people in the real estate industry, I feel honored when people trust my team to help them obtain the best terms on a mortgage possible. I can be reached by emailing kris@no-downpayment.com