NACA Does it Really Help: How We Got qualified in 90 Days (Part 2 of the Series)

Happy Monday! I wanted to start of the week by getting back to the NACA series. As you recall, in the first post of this series, we left off with the road to qualification beginning. You recall our Action Plan and I refer you to NACAs 10 Steps to Homebuying so you know what you are facing. At this point, we just needed to do everything on our list from our mortgage counselor. The Action Plan if you recall, was short but had a lot of detail.

Previously, I mentioned that you had to have detailed records. But what I hadn't mentioned is that once you agree on your monthly budget and monthly savings goal - you are locked in. Meaning you cannot spend anything more than agreed upon because you will be providing NACA with your monthly bank statements to prove you are staying on track. So no deviations at all. It's crucial that you understand what I am saying here. We pretty much felt tied down to the fact that we couldn't just spend willy nilly. And that we needed to keep a certain minimum in our accounts. NACA will scrutinize over every single line item in your bank statements.

A few pieces of advice on sticking to your NACA budget.

• If you pay your rent online - make sure you print yourself a receipt and can tie it back to your bank statements. Every month, I had to circle the monthly rent payment on the bank statements and provide the receipt back-up.
• Having multiple accounts can be overload - you have to submit monthly bank statements for each account.
• Negative account balances is a no-no, even if you have overdraft protection. It shows you lack money management skills.
• Consistency with transactions is crucial.
• Withdrawing large sums of money - not a good idea. You will end up having to justify every cent of the transaction.
• Use one account to pay household bills if you do have multiple accounts.
• Use a savings account as just that a savings account - do not have tons of withdraws from this type of account.

Keeping all these things in mind and staying focus will be key to helping you reach qualification faster. One error on your bank statements can delay you by a whole month or so depending on exactly what mistake you make. And that can be so frustrating to be close but still have to wait because you had a minor flaw.

Next, we had to tackle the items on our credit report that weren't becoming. We had to write a letter stating why each negative item was on our credit report and how we had resolved them or if we weren't aware of them at all. Between the two of us, we had to write about 8 letters total. This is where NACA really helps. Going the traditional path, you would have to get those items removed and wait 60 days to get your credit report and score to rebound. It's pretty simple, I developed a template for the letters and we just filled them in accordingly. And signed them. Not too painful at all.

One thing I will mention that played a big part in us having a faster road to qualification, was leveraging our 403b account. We had always planned to use this alongside our Savings to purchase our home. So with leveraging this, it showed we had more than enough savings to purchase. For many people, this is what causes them to move slowly through qualification with NACA. As they will have to include a line item in their monthly budget that outlines x number of dollars that they can save per month to meet their earnest dollars goal. Basically, if your NACA approved budget says you can only commit to saving $50 a pay, and your earnest money goal is $2,650 then you can tell that it would take a person a while to achieve this goal. And this step is crucial in even being considered to go through the qualification process.

Having all of these things in place, we were set to meet with our mortgage counselor in December. If I recall correctly, our meeting was scheduled two weeks before Christmas. We got to the meeting, all excited and fully expecting to walk out with a qualification letter. Since we were told that if you got your qualification request in by 10am - you had a good chance to get qualified quickly. Well, let me tell you - we were not happy campers when we left this appointment. After looking at everything our counselor said we needed to resolve two more minor things. And when I say minor, I mean minor. One was my last name was different on a previous tax return than it was on our then current tax return. Duh, I now go by my married name. And they did not like that our web printed bank statements didn’t' have the web address at the bottom of the page and I had only been submitting the pages with details. I had left off the fourth page that just has bank updates or is intentionally left bank. I ended up having to reprint everything with a web address and leaving in the fourth page and resubmitting. We left the meeting with an appointment for the week before Christmas. Urgh!! My frustration here, comes with the fact that NACA makes you submit everything monthly, so in theory your counselor should be evaluating your online files regularly to make sure that nothing looks crazy. Thus, avoiding what happened to us.

So at the next appointment, we had everything in order and we submitted for qualification. I feel I should explain that your ( a good one) mortgage counselor will not even recommend you for qualification unless they feel you have at least a 98-100% chance of getting qualified. Our mortgage counselor explained to us that it wasn't worth us (her or us) to submit a half done qualification request, only to receive a condition list longer than my body (and I'm 5'3") . I know with our first time going through the qualification process, our mortgage counselor was shocked that the qualification team only had about 5 conditions that needed to be resolved before we could get qualified. We on the other hand, couldn't believe it. How could we even have any conditions considering, we had followed every step required by NACA to the "T" and had paid for yet another credit report that showed we had fixed everything on it? But still we had these 5 conditions. It should be noted that it took over a week and half to hear back from the underwriting team about our qualification status. We kept checking our online file daily. And when it did come in - we set up a meeting with our counselor to discuss what it meant and what we needed to do.

Honestly, looking back on this now. We really didn't have any conditions that couldn't be resolved by finding back-up details. Or reprinting something. Or providing a clarification. We worked through these items, uploaded them into our file. Notified our counselor and she resubmitted. The second time was the charm, we got our qualification. Yay!! It only took us 90 days from the day of our first appointment with our counselor to become qualified. And everyone else I talked to that went through the program, said that was the fastest they had every known of someone to become qualified. There were members that had been in limbo for a year or so. Yikes!

Thankfully, by God's grace we were able to tackle this quickly and get that ever so golden qualification letter. Boy it sure felt good. In the next post of this series, I will tackle what happens now that you are qualified and how to stay qualified if you don't find your dream house before your qualification letter expires.