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| Uncommon Sense | Help for high-end home-buyers
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Don't cry for people with six-figure incomes who nevertheless feel challenged by the prices of upscale homes in rarefied markets. They can get assistance, too.
By MP Dunleavey
Editor's note: Columnist MP Dunleavey and eight other women have come together online to strip away the myths surrounding money, lay bare their assets and liberate themselves from debt. Follow the quest for financial fabulousness of these "Women in Red" every second Monday in Dunleavey's column on MSN Money.
Who would have guessed it would come to this: people with six-figure incomes who need help buying a home -- and can get it.
As median home prices have soared to record highs on both coasts and in many places in between, homeownership has slipped out of reach not just for those with lower incomes, but for many people who would otherwise be considered part of the upper-middle class.
This has been Carole's dilemma since she joined the Women in Red. Although she earns $130,000 a year -- an amount that puts her comfortably in the top 10% of all U.S. households -- the median home price in New York City last year was a challenging $435,000.
With $35,000 saved for a down payment, Carole doesn't have anywhere near the $80,000 in cash needed to buy a co-op apartment in the city.
A strange situation
While this may not sound like trouble to you -- and while some people might wish they had Carole's problems or suggest she move to a cheaper city -- many upper-middle class home-shoppers are facing the same dilemma in real-estate markets around the country.
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"Some people have always had affordability problems," says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. "But where it's been striking is for people we don't usually think would be facing these issues -- the middle income -- many of whom can't afford the home they want in the community they want."
Luckily, a handful of new programs and subsidies have cropped up to people with middle- and upper-middle incomes become home-buyers -- and Carole is one of a growing number of people to gratefully seize the opportunity.
A nonprofit lender grows in Boston
Enter NACA, the Neighborhood Assistance Corporation of America, a nonprofit with a long history of housing advocacy. Based in Boston, NACA started lobbying against predatory lending practices back in the 1980s, says CEO Bruce Marks.
In an epic battle against Fleet bank in the early 1990s -- which included civil disobedience, several court cases and a Senate Banking Committee hearing -- NACA got Fleet to commit $8 billion to a loan program for low- and moderate-income home-buyers.
Then they asked Fleet to give them $140 million to start their own community-based mortgage lending business. Fleet complied while also settling various predatory-lending lawsuits for millions of dollars.
Today, NACA is a $10 billion operation with 32 offices nationwide (see them on a map here). Although their primary financial relationships are with Citibank and Bank of America, "we're the only nonprofit mortgage lender in the country," says Marks.
As a result, the advantages NACA offers to home-buyers are considerable, as Carole discovered. The program puts buyers in homes they could not otherwise afford by giving them lower-than-market interest rates and either eliminating or reducing their down payments. Program features include:
- No income restrictions to qualify.
- No money down to qualify for a mortgage or, depending on the seller, for a purchase.
- Interest rates typically a point or more below prime.
- No application, title or appraisal fees.
- No closing costs or points for borrowers.
- No PMI (private mortgage insurance) by borrowers.
- Toll free phone: 888-302-6222
Sounds too good to be true
When Carole told me about NACA last fall, I simply didn't believe what she told me -- and I didn't attend the seminar required to be approved for a loan.
Carole had no such doubts and threw herself into the process. She attended the information session on Oct. 23; she went to her first meeting with a loan officer on Nov. 22; she attended a second meeting on Jan. 6; and she was approved for a $300,000, 5.5%, 30-year fixed mortgage on Jan. 9.
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