Can i refinance my NACA mortage with a different lender

Question

Hi

I’m new to real estate investing currently still researching about loan programs that will best help me as a newbie I don’t want to make any mistakes I’m scared... I read a bit about NACA mortgage. Anyone with an advice for me before I proceed.

Q.

Can I refinance and pull cash out of a property? Like a brrrr strategy

Q.2

Can I refinance NACA mortgage with a different lender?

Jonathan Taylor · Answer

@Campbell Agyei I closed on a fourplex with a NACA mortgage that I still have to this day. A few things about NACA, the process heavily deters investors for a few simple reasons:

1. You cannot have any ownership stake in any Real estate to close a NACA loan

2. NACA process is very long and arduous. It is not a quick 30 days and you are into a property. Average time frame is 1-2 years start to finish. I was with the program for 2.5 years, four unit purchase, complete gut, down to studs. Reno was 10 months but took a full 12 to get all the paperwork squared away.

3. If you can get a loan, its based on Owner occupy. If you move out you can refi to pull cash out i with another lender but this investment strategy should not be the relied upon as there are many factors in the NACA process that could kill your deal.

Short story is, if you can get a NACA loan, its worth it but it is NOT easy. Most of the issues are dealing with NACA reps who do not know a lot about the process or get back to you within a reasonable amount of time. So this lack to education/timeliness means you cannot move quick on deals and their process holds you up and could kill your deal. I was in escrow for 120 days and almost lost the deal 7 times due to NACA's incompetence in handling my file/understanding of how to UW a property.

If you go through it, you're in for a ride.

Nicholas Jackson · Answer

This is my current plan, and I am almost at the stage of getting approved by the underwriters and sending offers. After closing on the NACA loan you can buy as many properties you like as long as the property with the NACA loan is your primary residence. NACA puts a 25k lean on your property so you can't leave live elsewhere with a NACA loan on a different property. If you plan to live in the home for the entire mortgage you will be fine and can buy other properties freely. If you plan on moving you must refinance out of the NACA loan to get a new primary residence. I believe you can use NACA again while also owning other properties as long as you fit within their income guidelines and are not trying to close on a property while going through the NACA loan process but this part I am not entirely sure on. NACA is geared mostly against investors so house hacking is the only benefit it offers for investors.

Daniel Davila · Answer

@Jonathan Taylor i just came upon this thread, thanks for the information its helpful. Question for you though since you seem to be very knowledgeable on NACA. In your experience does NACA make it harder to refinance out of a loan if one were to do that within 5 years of closing? Or is it just a matter of having your paperwork together? Im curious to know when the time comes since i do plan to do this in the future, my MC said it shouldn't be a problem. Just wanted a second opinion thanks!

Jonathan Taylor · Answer

@Jackson Smith you can buy other properties if your fiestwas with a Naca loan. But naca is a one off. Once you use it, you cannot obtain another naca loan.

Jackson Smith · Answer

I also just finished my Introduction Seminar and they did mention the $25,000 lien they put on the property. So yeah, after 5 years of it reducing $5000/year, you can sell/refinance and not lose any money. But I also saw that NACA will work with you if you get a job in another city or state and they will release that lien for certain situations. It's basically to prevent fix and flippers from taking advantage of it.

And they did confirm that you can purchase other property as long as you continue to live in the property that has the NACA Mortgage. Ill get moving more on the process and give any updates that I think y'all would like to know. Thanks for all the knowledge and advice!

Nicholas Jackson · Answer

From reading the qualification workbook I do not see this information about the 5 year term. This information below is quoted directly from their workbook.

• "If at some point you decide to sell or refinance the home, you will need to contact NACA to obtain a release of the lien. NACA will provide a lien release without any charge to you if you have complied with all NACA requirements.

• These serious actions and remedies are in place to prevent the misuse of the NACA Mortgage. Lenders providing the NACA Mortgage also require owner-occupancy and may have their own enforcement mechanisms. However, these requirements will not prevent you from selling your house at any time, making a profit on the sale, refinancing your house, or purchasing other properties while continuing to live in the house purchased with a NACA Mortgage."

I believe you can refinance and move out at any point as long as you are in good standing with NACA and ask them to remove the lien in order to refinance or sell.

I also provided the link to the workbook below if you would like to read and explore the options in more detail.

https://www.naca.com/wp-conten...

Ramsey Rimkeit · Answer

I just finished the first intro seminar and got my NACA ID and there are some details I would like to add.It states in their initial agreement: "Members in the Purchase program... cannot own or hold any interest in other property (excluding land, time share, inherited property without a mortgage, or a mobile home titled as a vehicle) at the time of closing on a home through a NACA Program. However, after the close on their NACA Mortgage, they can purchase other property so long as they continue to live in the property that has the NACA Mortgage."Also, although refinancing or selling the home removes the lien, it's only 100% removed after you have lived in the house for 5 years. Technically, the lien is charged for those who break the agreement and don't live in the home, but the fee charged for selling in the first five years is called a "Neighborhood Stabilization Payment". For every year you have lived in the home, this "NSP" is reduced by $5000 so that it is no longer due if you sell your home after having lived in it for 5 years. This is my major dilemma right now: to commit to one home for 5 years (it will be the longest I've ever lived in the same home since I was 18.).

Jackson Smith · Answer

@Nicholas Jackson that info is gold! Thanks man! I did also learn today that you can own as much property in an LLC as you want and then go and house hack with NACA, because they only run your name and not your LLC for other owned properties. So thats a way around it if you own all your properties in an LLC and wanted to take advantage of NACA.

Jackson Smith · Answer

Yeah I did see that you can use it a second time after 3 years if you no longer held the NACA loan in the first property. I was just mainly concerned about growing a portfolio of conventionally financed properties while I house hack in my first NACA financed property.

Can i refinance my NACA mortage with a different lender

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