Buying a House and How We Did It

Last Updated by Neiko Johnson on 
July 24, 2021
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Buying a house is by far the largest purchase most people will make in their lifetime.

But, when you buy one at a younger age, it really brings some attention.

Some people may think you are rich or inherited some money to buy your house.

On the other hand, one might not even understand how you did it.

That is to say, homeownership may not be for everyone at this moment. Renting is fine but homeownership should be the ultimate goal.

We purchased our home using a great program called NACA (Neighborhood Assistance Corporation of America). NACA’s primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership.

Below outlines how NACA members can purchase their homes:

  • Without a down payment
  • No closing costs or fees
  • Perfect credit not required
  • And at-below market rates

Now we know you're probably thinking "no way!" But, we're here to tell you it's 100% legit and let us tell you more.

Buying a house using the NACA program

NACA offers the same terms, including below-market interest rates, for all people regardless of their credit score. They're a non-profit organization who are advocates for helping people get into homeownership.

Thousands of people benefit from their services and we have twice.

To be clear, the process isn't easy and requires a lot of time and effort. However, for what you get out of the program it's completely worth it.

We were able to purchase our home with no down payment, no closing costs on a 1.25% interest rate. Yes! We said 1.25%.

Since NACA doesn't require the traditional fees for buying a house, we decided to buy-down our interest rate as far as possible.

However, buying down the interest rate isn't the best decision for everyone. You must first calculate your break-even point to see if it's worth it. For us, it was worth it.

To get started with the program you must attend a home-buyer workshop that is 4 hours long. In this workshop they explain how the entire program works from start to finish.

This is where you learn about the home buying process, real estate issues, mortgage options, and becoming mortgage ready.

In addition to the workshop, you are required to volunteer a few times a year to be a member of the program. This is required because using the NACA program is completely free.

Once you become a NACA homeowner and see the benefits, you will want to help others become homeowners through the program.

Our experience buying a house using NACA

Our most recent experience with NACA had its challenges. We were using the program for the 2nd time so we fully understood how everything worked.

But, as we all know, there's always something that comes up. NACA only allows you to use the program every 4 years. We were about 4 months too early so we had to postpone our plans.

Also, NACA doesn't allow anyone to use their program who is a current homeowner. That was a huge issue for us since we already bought a house a few years before.

Ultimately, we were moving to be closer to work. It's common for some people to have a closing day on their current and new home at the same time.

However, this was not the route we chose. We decided to sell our house so we didn't have to worry about selling while going through the NACA program.

The great part of selling early was the equity we had in our house. In fact, we took that money and put it in savings until we closed on our new home. The equity was used to buy-down our interest rate and the rest went to paying off debt.

We could have done several things with the equity such as take a trip, buy things or even purchase unnecessary personal items.

However, having that money sped up our debt-free journey. We were completely aware that paying off debt was important.

On the other hand, this required us to rent a condo on Airbnb short-term until we could close on our new home. However, due to the strict requirements in the NACA program we faced even more challenges.

How we handled buying a house

The NACA process is far from perfect. And, we want to make that very clear. You will become frustrated and stressed during the process.

However, it's best to understand that before using the program. Our biggest recommendation to everyone we refer to NACA is, make sure you have everything in order (documents, tax information, etc.) and the process will go a lot smoother.

We were fully prepared but still experienced issues. There was an issue with our listed permanent home address and what was reflected on all of our bank statements, driver's licenses, etc.

We were not listed as renters or didn't have utility bills in our name with the Airbnb. As a result, there was a hold up due to the Patriot Act. So, we had to change our permanent address to our temporary condo to resolve the problem.

Ultimately, we experienced several issues but had to stay focused on our ultimate goal.

That is to say, NACA has a manual underwriting process that digs a lot deeper into your finances before you can become approved. In fact, this relates to why perfect credit is not required.

Moving forward, we plan to do everything with cash and have no more debt.

Mortgage debt is the only debt we don't get mad at as long as the mortgage is on a 15-year fixed and no more than 25% of your take-home pay. Our goal is to pay off our home in 7.5 years so we can continue building wealth.

As we look back we may have chosen a different route than selling our home before having the new one.

But, we kept praying and having faith and it all worked out.

Buying a house for the first time

Have you ever wondered if buying a house is impossible? Well, we are here to tell you it's not. However, you must be prepared and it has to make sense to buy a house.

There are many ups and downs to owning a house, especially when you are new to homeownership.

First off, you want to establish an income history. This is critical for buying a house with any mortgage company.

Important to realize, you will get started a lot easier with a secure income.

Secondly, focus on spending less money and save more before you buy a house.

The more money you have saved the better. At the end of the day, mortgage companies want to make sure you are responsible with your money.

Pay your bills on time and save as much money as possible.

Lastly, don't let social pressure affect your home buying decision.

If you aren't ready to purchase then wait. On the other hand, if you're ready to purchase then make sure you get a house that fits into your budget and is good for your situation.

Social pressure can destroy wealth if you let it.

Final words - Buying a house

The biggest benefit of using the NACA program is the amount of money you save on the front end of purchasing a home. Yes, you will have a larger mortgage, however, you avoid having PMI if you cannot put down 20% and closing costs.

This was beneficial for us as we were focused on becoming debt-free. We were able to move closer to work and still aggressively pay down debt.

The program is helpful for those interested in homeownership. But, it will require hard work to reach your goal of becoming a homeowner.

That is to say, take the time to become educated in homeownership and research what to consider when buying a home. The NACA program will help you get through the process a lot easier.

Are you thinking about buying a house soon? Why or why not?

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Article written by Neiko Johnson
Neiko is a personal finance expert and Co-founder of Secret to Finance. Along with his wife Alexis, they learned how to get out of debt and pay off $360,000 in 36 months.

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