The NACA buy down is the best in the nation, by far. Nothing else even comes remotely close. This is a real life example on how to get the lowest rate allowed by law(0.0625%)
NACA Interest Rate Buy Down:
1% of the LOAN AMOUNT, NOT PURCHASE PRICE (also called “one point”) reduces the borrower’s interest rate by 0.25% for a 30-year loan. One point reduces the borrower’s interest rate by 0.50% for a 15-year loan. The power of the buy down is jaw dropping eye opening unreal.
Member can contribute up to 7 points with their own money to the buy down. Seller can contribute up to 10 points to buy down.
ALL seller paid closing costs can go to buy down.(Remember, you pay no closing costs through NACA- This is extremely powerful)
Any additional money available will go to lowering the principle loan amount with lender matching grant if qualified(under 100% of median area income)- For DC/Rockville/Silver Spring/Frederick area this is 105k~ per household. Depends on the city you want to live in. Baltimore/Howard County/Annapolis/Columbia/Towson area is 87k. To find which MSA(Metropolitan Statistical Area) your city falls within, and the median incomes of those areas, please visit here:
NACA DC/MD/VA starting interest rate with no buy down as of last week was 3.625%. 3.625%= 14.5 points as each point is .25%.
The lowest interest rate allowed by law for citi mortgage is 0.0625%. Yes the decimal point is in the right location. That is 1/16th of 1%.(essentially 0%).
Remember NACA offers 100% financing with no down payment required.
30 year fixed loan example.
Purchase price: 300k. Each discount point is 3000. Seller is paying 3% closing costs(9000) which is 3 points. Assume you have 30k saved.
Starting interest rate is 3.625%.(already at least .5% lower than a conventional loan)
You contribute 7 points to buy down(21,000) That lowers the rate from 3.625% to 1.875%. The seller is contributing 3 points which will now lower the rate from 1.875% to 1.125% If you are happy with a 1.125% interest rate, that is all.
Can get a little tricky after that. If you make BELOW the median income for the area, you will qualify for the lender matching grant. This is extremely powerful. It’s essentially free money.
If you decide to bring another 13,500 to the table(so 34,500 total), your loan balance will go from 300k to 286,500, the bank will match your principle contribution dollar for dollar and reduce the interest rate another 4.5 points to achieve the lowest rate allowed by law which is .0625%.
As you can see now the loan would be 286,500 and not 300k. so each point would not cost 3000, each point would cost 2865 which would result in slightly lower amounts across the board. This is where it can get complicated real fast. Don’t worry though, the bank is very precise with all of its calculations, and NACA will verify. DO NOT rely on your NACA counselor to do this type of math on the buy down. This is part of the “sweat equity” you must put into your own file. We over here at Entourage Residential Group are experts at the interest rate buy down!
If you earn over 105k~ a year(for DC/Rockville/Silver Spring/Frederick area, or 87k for Baltimore/Howard County/Annapolis ) you would NOT qualify for the bank matching grant and your interest rate would be 1.125% based on the scenario above.
See median income list across the nation here: https://www.ffiec.gov/pdf/msa16inc.pdf
Purchase price will vary, loan amount will vary, closing money will vary.
Lets say the seller was offering NO closing assistance. For this reason it is much more valuable to try and buy a home where the seller is going to contribute closing money as it will drastically reduce your interest rate!
Lets say in this scenario above the seller only contributed 1% to closing. That would be 3000 and would reduce the interest rate by .25%
This would result in you needing to bring more money to the table to achieve the lowest possible rate.
Lets go back assuming the seller does give 3% closing help. Here are the total interest numbers over 30 years
3.625% interest=(among all of the other fees involved- PMI, Closing costs, TONS of others rolled into your loan or paid upfront) The interest on this is 192k over 30 years with a monthly principle/interest payment of 1368, first months interest being $905.
0.0625% interest= 34,500k upfront, 21k going to the bank as a “fee”, 13,500 going back into pocket into equity. Amortized interest over 30 years= $2700. 21000+2700= 23,700 total interest. Principle and interest payment monthly is $840. First months interest= $15/month. INSTANT EQUITY FROM THE START!!
This is not found anywhere else outside of the NACA program!
Remember: These monthly payment numbers only include Principle & Interest(P & I) payments.(The money going to your actual loan) This does not include property taxes, HOA, home owners insurance, etc.
This is also calculating at a 3.625% NACA rate, which is approx .5% currently lower than a conventional loan(Between 4-4.2% currently)
Below is actual financial documents of a 0.0625% 30 year fixed interest rat through Citi Mortgage we obtained.
In this first document, this is the total yearly interest we paid on 12 mortgage payments. The total interest was $227.95
This is a copy of our year end statement from 2016. As you can see total principle(equity) applied is $11,601.23, total interest on 12 payments is $209.25
This is a yearly mortgage amortization chart. As you can see total interest with our 0.0625% rate over 30 years amortized is: $3,140.96
This simply shows the Mortgage Details. Our original loan balance of $382,941 with the 0.0625% 30 year fixed rate.
This is a list of every single payment we have made to date on our loan.