[quote=flu]Ok..I’ll be the one to ask this question which I’m sure some others are thinking…. How the heck do we (as an individual) benefit from this…(strictly in terms of a financial/investment perspective)? Anyone offer some ideas on how to get some $$$$ from this? Please educate some of us dumber people (inclusive)….
Is the idea to basically wait an let a lot of people take out these loans, and possibly assume them if the later turn out to become distressed??
Inquiring minds want to know.[/quote]
flu, lets presume an original maximum 97.5% FHA mtg at $729,750 in 2012 is offered as an assumption to you in 2015 (after being paid down for three years). Would you REALLY WANT a 95-103% mtg (depending on RE values at that time) which has over $400 mo in MIP built into it NOT paying down any principal?? Do you honestly believe the FHA lender will let you out of the monthly MIP payment (esp if an appraisal is not even required at that time). By not getting an appraisal upon purchase, the buyer is essentially accepting that the property was “worth” at least the loan balance, no? An appraisal is for the buyer’s protection.
Even if rates go up (and values stagnate or go down), as a buyer it is better to have an appraisal and borrow less than it is to be underwater on a 4% “assumed” mortgage, IMHO.
You can refi the “rate” later when it goes down again … as it eventually will. You can’t change the amount you borrowed.
