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ever heard of this organization?

Discussion in 'The Lounge' started by nc87k5, Jul 26, 2004.

  1. nc87k5

    nc87k5 3/4 ton status

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    I've been looking for a house for a couple of years now and have just heard of this home ownership program called NACA or Neighborhood Assistance Corporation of America. supposedly no down payment, no closing costs or fees, and with an interest rate of 5.375%. It's got me literally scratching my head because like I've said, I've been looking for a couple years now and this is the first I've heard of this program. anyone know of them or dealt with them? if not, who do I need to call to see how legit these guys are?
     
  2. hi pinion

    hi pinion 3/4 ton status

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    yeah i dunno, sounds like a sweet deal though. Mabey thats their best rate if your credit is perfect /forums/images/graemlins/thinking.gif
     
  3. nc87k5

    nc87k5 3/4 ton status

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    may be. just states that credit score doesn't have to be perfect. there's only a 1-888# and no website, that's what's got me, everyone has a website. /forums/images/graemlins/dunno.gif
     
  4. hi pinion

    hi pinion 3/4 ton status

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    Mabey your supposed to send them money /forums/images/graemlins/thinking.gif i dunno. /forums/images/graemlins/histerical.gif Sounds too good to be true. Then again someone has to live in these homes. I find things that seem to be too good usually are.Just my experience /forums/images/graemlins/thumb.gif
     
  5. Desert Rat

    Desert Rat Fetch the comfy chair

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    Could be a program called an "equity share". The way I've seen it work is this. A co. has a group of investors that are willing to front the money for a downpayment and closing costs. You move into the house and make the payments. Your initial percentage of ownership is zero. Every payment you make increases your ownership percentage by the amount of the loan that is paid towards the principal, but not the interest. Some companies let you claim the entire ownership write off on your taxes. Others split it with the investor(s). What are the pros of this plan? Instead of paying rent, which has no tax benefit, you can get write offs. You are also potentially paying towards a house you may own in the long run. This is attractive for a person who otherwise might never have any chance at home ownership.

    The con? Your percentage of ownership starts very small. It is only the principal money, not the interest money you are investing. Despite the tax write off on the interest, your ownership increases very slowly. Your percentage of investment also stays very small by comparison to the investment of the investor(s) for quite a while. Most home payments start off as primarily interest, with little towards principal. This means that your best benefit is if you are in it for the long haul. However, since these plans typically appeal to those that already have a problem getting a home loan because for some reason they are high risk, the odds of the person sticking it out might be slim. This is where the investor benefits.

    If the person making the payments defaults on the loan, the principle owner is still the initial investor who plunked down the downpayment and who has the majority ownership in the house. Usually in the contract it is written that defaulting on the loan payments results in the person moving out and forfeiting ownership in the house. At best, they get the very small percentage of ownership that they earned which is easily bought out by the investor. The investor simply puts the home back on the market, most likely for a profit, and makes some bucks with little to no risk to themselves. Or, they look for another equity share partner to come in and continue on the payments with the same deal.

    These deals are high risk, high gain. If you never default on the payments, and there is no monstrous balloon payment due later, you can make them work for you. If there is a huge balloon payment at some point, and you might not be able to afford it, then you are screwed. The way the investor guarantees a profit on these types of deals is that they demand a balloon payment at the close of the life of the loan, usually 15-30 yrs. or shorter, which equals the downpayment with some interest tacked on. This is the failsafe for the investor which pretty much guarantees them a profit one way or another. Sometimes that interest equates to a huge balloon payment that knocks the other party out of the running. The temptation though for the other party is that their financial outlook will brighten during the course of the loan and they will be able to buy out the investor before the balloon payment is due.

    However, I am no real estate expert and this is just one program I have heard of. I'd look into it very suspiciously. Nothing in life is for free.........
     
  6. tomseviltwin

    tomseviltwin 1/2 ton status

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    They've been around a long time. They are a nonprofit group who help economically people buy a first home wtih privately raised funds. You do have to qualify for a mortgage, but the requirements are a little softer. You have to be in a lower economic payscale to qualify and they choose the area of town you can buy in. Sort of a revitalization program of "rough" areas. We talked with them when my wife and I were first starting out, but took another course.

    They also have stipualtions about how long before you can sale house, have home business, ect.
     

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