Comments on: MortgageFilter: Can 5.5% interest with average credit really be possible?

Question: MortgageFilter: Can 5.5% interest with average credit really be possible?

roundrock — Sun, 06 May 2007 07:49:42 -0800

Mortgage Filter: My wife and I are looking for homes in the greater DC area and found what we think might be one of the best mortgage deals in the country. Of course, you can imagine that we are incredibly skeptical. More after the jump.

The company is called Neighborhood Assistance Corportation of America (NACA). They offer mortgages, as of May 4th, at 5.5% interest. The only catch that I have found is that they require you to participate in 5 activist activities (basically protests against the mortgage industry). From my googlefu, I've found that they were successful in getting Bankfleet to stop their predatory mortgage lending practices in the late 1990s and then secure extremely favorable interest rates on mortgages (the same tactic was used later against BofA with similar success). We also plan on using Ziprealty to keep our real estate agent costs down (http://www.ziprealty.com). If anyone has suggestions on any other great mortgage or real estate companies please let us know!

https://www.naca.com/about_naca/nacaProduct.jsp
From their website:
PURPOSE: Purchase
Purchase & Rehab Refinance (to save people's homes) Refinance (for home improvements)
PROPERTY TYPES: One to Four Family, condos, and co-ops.
Existing, New Construction, Renovations, and Manufactured
DOWN PAYMENT: None
CLOSING COSTS: None (paid by lender)
INTEREST RATE: One to five percent below market
BUY-DOWN: Additional funds can reduce the interest rate One percent of mortgage amount reduces interest rate by one quarter of a percent (.25%). A tremendous added benefit.
APPLICATION FEE: None (paid by lender)
POINTS & FEES: None (paid by lender)
CREDIT HISTORY: Perfect credit not required
P.M.I.:
(Private Mortgage Insurance) None
NSF/Membership:
(Neighborhood Stabilization Fund) $50 per month for five to ten years
Provides assistance to homeowners at risk of losing their home. The time period for the payments depends on the mortgage amount. The NSF payment constitutes and automatically satisfies the Membership Fee.

By: caddis

caddis — Sun, 06 May 2007 08:14:05 -0800

Is that a fixed rate mortgage? That sounds like a good deal. I would check with them, but I bet the NSF payments are tax deductible charitable contributions.

By: roundrock

roundrock — Sun, 06 May 2007 10:03:40 -0800

Yes, it's a 30 year fixed.

By: daisyace

daisyace — Sun, 06 May 2007 14:38:39 -0800

That does sound really intriguing. For your price range, have you figured out what the rate equivalent would be once you've added in the extra $50 per month? I just tried out a mortgage calculator, and on a 300K loan, for example, a $50 difference is about the difference between a 5.5 and a 5.75 rate. That could be better or worse than it sounds, depending on whether a $50 fee is more or less tax deductable than $50 in mortgage interest. (Also, I see that the fee wouldn't apply for the whole life of the loan like the higher payment would, but that might not matter if you don't own the home beyond the term of the fee. And, if you do sell while the fee still applies, do you get to stop paying it?) In any case, just make sure you're factoring the fee and its implications in to your comparisons to decide whether it's an awesome deal -- I hope it is!

By: phixed

phixed — Sun, 06 May 2007 16:32:05 -0800

FWIW, there is a Chicago bank that has a program for a first time homeowner buying in an "up and coming" type neighborhood that offers rates a half to full percentage point below prime on fixed rate mortgages.