FHA Loans and PUD Rules

[chrisp]

Anyway kinda sick of fighting.

But, actually would be somewhat interested in your “affordability” numbers. Can someone send me a link to some references? I wouldn’t mind running the numbers in a more conservative route? Someone said affordability has been out of whack for a decade. Are you able to send me some old lending criteria?

Thanks.

[patientrenter]

Yes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.

Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.

Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.

[patientrenter]

Yes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.

Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.

Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.

[patientrenter]

Yes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.

Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.

Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.

[patientrenter]

Yes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.

Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.

Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.

[patientrenter]

Yes, $60K is a tiny amount if you plan to spend $600K. You are just starting your career, chrisp. I assume you are young, maybe 25. If so, then it makes a lot of sense to borrow more now than at any other time in your life. If you fully expect (not just hope) to earn $300K or so a year within the next few years, then paying $60K for a $600K home now, and arranging to have others pay $560K until you pay them back, makes some sense.

Well, it would make sense, except that home prices are at historic highs, even after some small recent declines. So paying a lot for a home now is taking on great risk of future losses. And the other part that doesn’t make sense is that those future losses, after your 10% downpayment is gone, have to be covered by taxpayers. In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.

Oh, and I know what I am saying isn’t relevant to the real world we live in. The govt allows almost anybody to borrow 97% of the purchase price, less $8K tax credit, using a subsidized low-cost non-recourse loan. So the reality is that you are officially OK’ed to blow as much taxpayer money as you want. I am speaking only from the perspective of what I think should happen.

[chrisp]

[quote=patientrenter] In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.[/quote]

When were the anti-deficiency statutes passed? Old days? By taxpayers you mean the TARP money that wasn’t paid back?

I don’t mind the debate. Just the kinda moral high ground attitude. I don’t want to talk about whether we should go to war or not or whether abortion should be legal. Just get some info on FHA loans. 😉 Shouldn’t you yell at FHA for allowing 3.5% down. I guess you probably do in other topics.

Also, I do see the point about market manipulation, but I’m gonna buy a house soon. So that is my reality. So are a lot of others. It does suck for you guys, but it’s what’s happening.

[chrisp]

[quote=patientrenter] In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.[/quote]

When were the anti-deficiency statutes passed? Old days? By taxpayers you mean the TARP money that wasn’t paid back?

I don’t mind the debate. Just the kinda moral high ground attitude. I don’t want to talk about whether we should go to war or not or whether abortion should be legal. Just get some info on FHA loans. 😉 Shouldn’t you yell at FHA for allowing 3.5% down. I guess you probably do in other topics.

Also, I do see the point about market manipulation, but I’m gonna buy a house soon. So that is my reality. So are a lot of others. It does suck for you guys, but it’s what’s happening.

[chrisp]

[quote=patientrenter] In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.[/quote]

When were the anti-deficiency statutes passed? Old days? By taxpayers you mean the TARP money that wasn’t paid back?

I don’t mind the debate. Just the kinda moral high ground attitude. I don’t want to talk about whether we should go to war or not or whether abortion should be legal. Just get some info on FHA loans. 😉 Shouldn’t you yell at FHA for allowing 3.5% down. I guess you probably do in other topics.

Also, I do see the point about market manipulation, but I’m gonna buy a house soon. So that is my reality. So are a lot of others. It does suck for you guys, but it’s what’s happening.

[chrisp]

[quote=patientrenter] In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.[/quote]

When were the anti-deficiency statutes passed? Old days? By taxpayers you mean the TARP money that wasn’t paid back?

I don’t mind the debate. Just the kinda moral high ground attitude. I don’t want to talk about whether we should go to war or not or whether abortion should be legal. Just get some info on FHA loans. 😉 Shouldn’t you yell at FHA for allowing 3.5% down. I guess you probably do in other topics.

Also, I do see the point about market manipulation, but I’m gonna buy a house soon. So that is my reality. So are a lot of others. It does suck for you guys, but it’s what’s happening.

[chrisp]

[quote=patientrenter] In the old days, any risk that you didn’t take on, and the bank took on instead, was between you and the bank. But now almost all the risk, after a downpayment has been exhausted, is take on by taxpayers, so it’s all of our business.[/quote]

When were the anti-deficiency statutes passed? Old days? By taxpayers you mean the TARP money that wasn’t paid back?

I don’t mind the debate. Just the kinda moral high ground attitude. I don’t want to talk about whether we should go to war or not or whether abortion should be legal. Just get some info on FHA loans. 😉 Shouldn’t you yell at FHA for allowing 3.5% down. I guess you probably do in other topics.

Also, I do see the point about market manipulation, but I’m gonna buy a house soon. So that is my reality. So are a lot of others. It does suck for you guys, but it’s what’s happening.

[patientrenter]

chrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:

1. Home price should be no more 2-3 times income

2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.

3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)

Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.

I hope someone can give you a better source.

[patientrenter]

chrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:

1. Home price should be no more 2-3 times income

2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.

3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)

Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.

I hope someone can give you a better source.

[patientrenter]

chrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:

1. Home price should be no more 2-3 times income

2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.

3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)

Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.

I hope someone can give you a better source.

[patientrenter]

chrisp, I know there are others on this board who have that info (about historical affordability measures). Just in case they don’t cough it up quick, here are some very rough traditional ratios:

1. Home price should be no more 2-3 times income

2. Downpayment (actually from the buyer, not a second lender) should be at least 20% for an owner-occupied home, and 30% for other homes.

3. Regular home debt payments (or was it all home payments, including home insurance?) should not exceed the smaller of (a) 28% of income, or (b) 33% of all debt service obligations (including car payments and credit card payments etc.)

Relying only on 2 and 3 is risky in a low interest rate environment, because low payments can coexist with prices in the stratosphere in such an environment. So if 2 and 3 look good, but 1 doesn’t, exercise more caution.

I hope someone can give you a better source.

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