In 12 months, FHA will probably be much different than it is today, it is the frontline for political tinkering. Traditionally it was best for first time buyers and those without 20% down. In the last 5 or six years, the private sector loans went past what FHA ever insured, PMI, 0 down and piggyback loans made FHA irrelevent. In a year, those things may all be part of a history book and FHA insured loans might be the only game for sub 20%, but we will see. It was part of the soloution to the Great Depression so if we end up in GDII, it will play a bigger role.
My first loan was an FHA loan and I can tell you it did what it was designed to do, got someone just out of college a home loan with little down and student loans, for me it was the only loan I could get at the time. Right now, I don’t think it is competative, rates are higher, requirements are stricter than the loose money we’ve seen of late.
When the day comes and you go to get a loan, just compare rates and payments, weigh PMI, FHA MMI and all the factors one would when buying groceries and pick the best one for you. There’s no magic in any loan program, you have to pay them all back. If it has a lower payment, there’s a catch. As the saying popularized by Milton Freidman goes “There’s no such thing as a free lunch.”
