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NACA: A Long-Time Resource for Short-Term Loans
In the next few months, hundreds of homebuyers are expected to take 15-year fixed rate loans funded by Citigroup Inc. and Bank of America.
Offered at a low rate of about 3 percent, borrowers also can pay “points” (one point is 1 percent of the total loan amount) to lower the interest rate charge further.
Usually, just borrowers with pristine credit qualify for low rate mortgages. And, it’s only financially savvy consumers who save extra to pay points or who choose a 15- year mortgage over the traditional 30-year, knowing that the shorter term – despite higher monthly payments – means they’ll own a bigger portion of their home outright, free of mortgage, sooner.
But many of the borrowers taking these loans didn’t have great credit scores or know the advantages of 15- year loans – until they learned of the Neighborhood Assistance Corp. of America, a Boston-based nonprofit.
Indeed, while the funding for these 15-year loans is provided by Bank of America and Citigroup, NACA counsels borrowers on when they’ll be able to afford the loan, and makes the loan approvals.
“We have had a 20-year relationship with NACA,” observes Terry Francisco, a Bank of America spokesman.
“They have a good track record of getting funding to subsidize some of the interest rate to make loans affordable,” says Paul Leonard of the Center for Responsible Lending. “And they have a unique approach of looking not just at a single credit score but whether people can afford the payment on the loan.”
Borrowers with any income can use NACA, but the mortgages made must be under FHA limit in their area. Financial counseling at one of the NACA offices in 35 states, or by phone is required. More information is at www.naca.com.
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