In part one of this series I introduced you to my experience with Neighborhood Assistance Corporation of America (NACA) and the introductory homebuyer’s workshop. Today, I would like to tell you about the next major step in the NACA process – mortgage counseling.
After you have attended the homebuyer’s workshop and returned your registration information, within about 2 weeks you will receive an email with what will become something as important to you as your social security number, your NACA ID number.
Keep it. Save it. Make a note of it in your phone or where you can easily access it when you need it.
Along with your NACA ID, you will receive information on logging into your online NACA file. NACA utilizes a paperless system. It is YOUR responsibility to upload your documentation via fax or directly through the computer. If you are not computer savvy, I highly recommend finding a friend who can walk you through the easiest methods for uploading your documentation.
When I refer to documentation I mean bank statements, copies of specific bills, your budget (more to come on that later), paystubs, and any additional proof of income. The homebuyer’s workshop describes in detail exactly what items need to be uploaded.
Here is the FIRST IMPORTANT TIP I will share with you today: BE PROACTIVE. GET ORGANIZED. Gather all of your documentation EARLY. Keep a binder and stay on top of all of your documentation. Every time you receive a new paystub, bank statement, etc. upload it to your NACA file immediately and keep it in an organized binder.
At the workshop you will learn that NACA requires you create a budget. They breakdown line items for you. You absolutely must have this prepared. This budget served me and my fiancé for more than just home buying aspirations. Being that we were engaged and planning our lives together, it was a phenomenal learning experience for the both of us. We both learned how to manage our expenses and income. Budgeting became very important for us and we learned how to save money on a monthly basis. If you were to ask me what the absolute best part of the NACA experience was, it would be how to PROPERLY and REALISTICALLY budget.
At this point you have your NACA ID, are gathering your documents, and preparing your current budget. Your current budget is how you are spending and what your expenses are at that time. No need to exaggerate. They need to see your REAL utilization of money. So, what’s next?
You will be assigned a mortgage counselor and will be assigned a first appointment. Yes, the appointment AND the counselor will be assigned to you. These mortgage counselors are often booked for weeks in advance. If it is IMPORTANT for you to buy a home, then you will make your meetings happen. You will be able to schedule future meetings at more convenient times later in the process.
So, here is my SECOND IMPORTANT TIP: FIGHT for a good mortgage counselor! When I was assigned my first meeting, it was going to be a “telephone meeting” with someone in an out-of-state office.
I immediately called my local office and demanded to be scheduled with a local counselor. A telephone meeting is NOT the same as an in-person meeting. MAKE SURE your first meeting is in-person. Do not settle for anything less. Also, if you connected with a mortgage counselor at your workshop, request them as your mortgage counselor.
If you are applying with a spouse, significant other or relative, you BOTH need to attend all meetings. Again, if it is important for you to buy a home, you will make it happen.
On the day of your first meeting, have all of your documentation with you, AND already uploaded to your NACA online file. Be organized. Refer back to the NACA manual for the list of required documents to verify that all of your documentation has been uploaded.
Your mortgage counselor will review three main areas. First, they will run your credit history. There is a minimal charge for this. The counselors do NOT look at your score, they’re more interested in your credit history. If there are any red flags that will cause delays in getting a NACA approval, your counselor will point them out for you. For my fiancé and I, there were 3 collections accounts that we were unaware of that we needed to close-out. The counselor added these items to our “action plan” which we received at the end of our meeting.
The second area that the counselor reviews are your bank statements and paystubs. If there are any overdrafts, or questions about spending, these will be addressed. Overdrafts are NOT allowed. Refer to the NACA manual for the appropriate length of time since the last overdraft. The counselor will also point out questionable spending and advise you of anything you need to resolve. Next, your savings will be analyzed. You will discuss the anticipated purchase price of your new home and the monthly payments, then calculate how much you should have in your savings account for the home purchase. These items will be added to your action plan.
Finally, your counselor reviews your budget with you. This is something you need to STRICTLY ADHERE TO. By sticking to your budget you show that you are financially responsible and capable of handling the expenses of being a homeowner. Again, this is the aspect of the process that my fiancé and I benefited from the most. We realized that our small, frivolous spending added up to a large amount at the end of the month. We also learned that we were capable of saving more money each month than we thought possible.
At the end of your meeting you will receive an action plan with all the items you need to address before your next meeting. If you have plenty of money in savings, no red flags on your credit report, and your budget is in line you may be able to go straight to the application process.
For us, we needed to wait about 6 or 7 months to save enough money. We also used that time to clear up red flags.
One of the differences between NACA and a standard mortgage broker/company is that you are not going through this process for a pre-approval. You get APPROVED from the beginning. All of the hoops you jump through have a reason—an actual APPROVAL letter.
I will emphasize again that it is very important to upload your documentation every single month. Find a way to track what you need to upload. Also, always keep a copy of everything.
As you continue through the process, you will see the items on your action plan get checked off and will feel a major sense of accomplishment working towards meeting your savings goals!
After your follow-up meetings, and once you have completed the items on your action plan, your mortgage counselor will let you know that it is time for the application process!
Stay tuned as the last installment of the series discusses the application process, house hunting and being under contract!
If you have any questions you want to make sure to address in the final post, either comment or email me. I will do my best to help as many as I can!
Side note: Being that I have gone through the NACA process, I highly recommend you read ALL parts of my NACA experience before you make any decisions. You may also consider attending just the workshop to become more informed before making your decision. If you have any questions, please feel free to ask! Email me at NotSo30s@gmail.com )