NACA Part 1: Pros & Cons of the NACA Home Buying Program
I’m buying a home! It’s been in the works for over a year now and I’ve been doing a ton of research. I’m using the NACA home buying program, a housing program to assist low and moderate-income buyers. If you’re curious about NACA, read on for the juicy details. It’s not as simple as it sounds.
Pros of NACA
NACA stands for the Neighborhood Assistance Corporation of America. Buying a home is the largest financial decision people make in their lives. NACA helps people get over some of the hurdles that have traditionally kept people from buying homes.
1. NACA helps you understand costs
Buying a home through NACA has big advantages. They help people get a budget. As a former budget coach, I think they do a great job in helping explain to people what it really costs to own a home beyond the mortgage.
They explain the maintenance, the upkeep, the long and short-term things you need to think about, from lightbulbs to roof replacements. I think everyone needs more awareness when taking on a mortgage.
2. NACA helps reduce down payments and closing costs
NACA does not require a down payment or closing costs on a house. Most people can’t afford a 20 percent down payment on a house. Even a 3 or 3.5 percent down payment is still a lot on a $300K house in my neighborhood.
We haven’t even gotten to the closing costs–the costs you have to pay upfront to the appraiser, the title company, and other professionals involved in the mortgage process. Sometimes the closing costs are as much as the down payment.
Most people don’t have the money lying around to buy even an entry-level $300K house, which closes people out of the housing market.
3. Benefits of real estate
I don’t know the exact quote, but something like 90 percent of millionaires own real estate. Real estate, especially in the U.S., is a very traditional path to wealth and generational wealth. I know single moms like myself are very interested in owning real estate.
4. NACA reduces interest rates
NACA keeps its interest rates ridiculously low. The average 30-year market product is like 3.5 percent, somewhere around that. NACA is about 3 percent for a 30-year mortgage, which is unheard of and keeps your mortgage way down.
They also offer a 15-year mortgage product with an even lower interest rate–something like 2.6 percent which is crazy low.
5. NACA doesn’t charge PMI
PMI is important to understand. It’s an insurance that people typically pay when they can’t afford a 20 percent down payment on a house. It’s an insurance to protect the bank or lender, not you. This can add hundreds of dollars to your mortgage payment on top of the regular homeowner’s insurance.
Cons of NACA
NACA sounded too good to be true, which is why I have researched for a year about this housing program. It’s legit. But with all those benefits, there are some drawbacks.
1. NACA is inundated with requests
NACA has over 30 offices across the U.S. but they are not very well staffed. Getting information and timely appointments with counselors and workshops. can be tough.
It’s taken me months to meet with my first counselor to get certified for the program. I inquired in April and my appointment was in August, which is a long time to wait. I’m not in a rush to buy a house, which helps me stay patient. Just stay clear that it’s not a fast process.
2. NACA’s long-term requirements
NACA requires you to live in the home you buy for at least five years before selling or renting it out. I’m fairly sure this is a stipulation that I read in the packets of information. If you want a home to rent or flip, NACA may not be a good fit for you.
3. NACA requests dues and volunteering
NACA asks you to pay membership dues and volunteer as a way to pay it forward. They are helping out a lot of people, so they need help. They ask for $25 in dues per year, which I think is honestly so low. But they want you to volunteer five times a year at some of their on-site events in different cities.
For me, it is not a big issue, I love talking about money and finances so volunteering to help others with their homeownership dream is not a big deal.
Pros and cons of the NACA home buying program
There’s a lot to learn when it comes to NACA. I also want to mention that NACA is not limited to only first-time home buyers so don’t shy away from the program if you’ve owned a home before.
I like to share information with my single mamas because we have some issues that other groups of people may not have. I’ll share more on NACA and the process I’m going through in other posts, so keep in touch. See my Part 2 for information on the step-by-step NACA home-buying process.
Let me know if you have used NACA or are interested in the program by leaving comments below.