My wife and I are going to purchase our first home this year, hopefully through NACA given their incentives such as the low interest rate and no closing costs.
However, we would also like to begin investing in real estate, (particularly rehabbing delapidated propertes then flipping or landlording them) and NACA has a rule which states that you cant own any other homes while you have a mortgage through them.
personally, I would purchase your home and own it for a little bit before you jump into flipping. Are you buying a new home or something a bit older that may need work? Have you considered buying a double? Live in one half, get the cheap financing, and be invested in real estate by having the tenant pay some of the mortgage…or all of it depending on the deal you find.
If you feel strongly about purchasing and then turning around to buy another property, how are you going to purchase it? Will your debt ratio be good enough to qualify for an additional payment? Are you buying this house undervalue, rehabbing as you live there, and then refinancing 6 months down the road to fund your investments?
All i’m saying is look down the road and get a game plan before you jump in. I made the mistake of purchasing a double at almost market value but now i’m finding it tough to get a loan for a $50k rental I found.
Can you get approved with only one borrower listed on the note? If so, you can purchase the others under the other name.
If the benefits of this cheap financing outweigh the potential profits of future deals, then go with the NACA. If the opposite is true, then consider other routes.
Never really heard about NACA til you just mentioned it.
According to their website, you must not own any property in order to qualify for their program. I’m not sure what they do once you already have a mortgage with them. I suppose they could call it, but I doubt they’d do that.
How much money do you have to invest? Would you have 5-10% for a downpayment for an investment property? Actually most banks prefer 20-25% for a non owner occupied, but there’s still a few that will do 90-95% financing.
Oh, the way around that is to buy the property and put it in the name of a corporation or a trust and then they won’t know you own another property. You would still have to qualify for the mortgage though and if you need the services of NACA, that may be difficult to qualify through regular channels.
My spouse and I purchased our 1st home through NACA on 2-15-06. It was a wonderful program as you know. However, you are a bit confused about the rules so allow me to help you. NACA requires that you do not have any other properties when closing on a mortgage with them and that your property must be an owner occupied property as long as you have a mortgage with them. So, if you had an exsiting home that you wanted to sell, it must have been sold before any closing docs are signed. Next, you can have investments properties AFTER you close and the home is yours. The only requirement is that the home that you purchased through them IS your primary residence, meaning you couldn’t take advantage of the low rates and fees and then decide to rent out your property, while you get a new one, unless you refinance with another lender. You could only rent out your home if you chose to live IN it as a landlord-maybe by renting a room or the basement to a potential tenant. Now, if you know that after you buy your home, you want to remain there and purchase other properites, you can! But, if you decided that after three years you wanted to join NACA again to perhaps upgrade your home, you would be unable to do it because of the investment properties. You would have to use another program or your earnings from your investments to purchase your new residence.