I mean our PITI payment is (for example) $3000. With the tax writeoff it is effectively $2500. For us to rent the equivalent house in the LJ school district similar to this house would cost $3000. This is all based on an FHA loan with a DP of 3.5%. Make sense?
The numbers I used are arbitrary but convey the point.
We did the FHA loan for a few reasons (we are all cash with no loan contingency but are still planning to go FHA):
1. We can afford the mortgage even with the low DP no problem.
2. The interest rate etc. is similar to a typical 30 year conventional.
3. Money is cheap right now so I might as well borrow as much as I can.
4. Maximize interest write-off.
…and lastly…
5. I am not stupid. The world is crazy right now. Who knows we might go into a depression and both of us might lose our jobs. With the FHA loan I keep a significant amount of cash and cash-equivalent on hand as needed. Both my fiancee and I have jobs with big bonuses so we can use those to pay down principal as we deem fit. The FHA insurance premium bleeds off after 5 years or you can pay the loan down to LTV of 80% and you can get rid of it.
