FHA loans; why not?

[scaredyclassic]

it’s just that if the FHA premium can be cancelled w/ regular payments, then the whole financial calculation between FHA and conventional radically shifts….does anyone know anyone who has had an FHA loan where the PMI stopped after a few years?

[an]

[quote=scaredycat]use wife’s credit?[/quote]
Assuming your wife makes as much as you, then that would be a decent plan B. If you think price will drop another 20% where you plan to buy and you’ll walk w/in 5-8 years, then it doesn’t matter if PMI/MMIP doesn’t end after 5 years, it’s still cheaper to go the FHA route. If it doesn’t drop 20% down or if your time frame changed to 10+ years, then that would totally change the calculation. What’s the chances we’ll see 20+% depreciation in the next 5-8 years in the price range you’re looking to buy. That’s the question you have to ask yourself. I still think rent and build up an even bigger down payment/cash reserve would be a better option if your plan is to only stay there for 5-8 years (unless inflation start to pick up and price starts to head north).

Regarding PMI/MMIP, if price keep on falling and LTV doesn’t get to 80% for a very long time, is there a time limit for PMI/MMIP?

Here are some scenario and # for you to chew over. Assuming the house is $400k, rates for conventional is 4.75% and rates for FHA is 5.375% w/ 1.5% upfront cost roll into the loan and 0.5% MMIP. If price drop 20% in 8 years, it’ll be ~$26k cheaper to go w/ the FHA route. If price stayed flat over the next 8 years, it’ll be ~$53k cheaper to go w/ the conventional. If price increased 20% over the next 8 years, it’ll be ~$119k cheaper to go w/ the conventional loan. I did not take tax deduction into consideration. It might add a few grand in the FHA favor but it wouldn’t change the overall picture. FHA seems to be a good idea, only if you HAVE to buy now and plan to walk after 5-8 years and price drop. If you don’t have to buy now, rent would be a better option.

[an]

[quote=scaredycat]use wife’s credit?[/quote]
Assuming your wife makes as much as you, then that would be a decent plan B. If you think price will drop another 20% where you plan to buy and you’ll walk w/in 5-8 years, then it doesn’t matter if PMI/MMIP doesn’t end after 5 years, it’s still cheaper to go the FHA route. If it doesn’t drop 20% down or if your time frame changed to 10+ years, then that would totally change the calculation. What’s the chances we’ll see 20+% depreciation in the next 5-8 years in the price range you’re looking to buy. That’s the question you have to ask yourself. I still think rent and build up an even bigger down payment/cash reserve would be a better option if your plan is to only stay there for 5-8 years (unless inflation start to pick up and price starts to head north).

Regarding PMI/MMIP, if price keep on falling and LTV doesn’t get to 80% for a very long time, is there a time limit for PMI/MMIP?

Here are some scenario and # for you to chew over. Assuming the house is $400k, rates for conventional is 4.75% and rates for FHA is 5.375% w/ 1.5% upfront cost roll into the loan and 0.5% MMIP. If price drop 20% in 8 years, it’ll be ~$26k cheaper to go w/ the FHA route. If price stayed flat over the next 8 years, it’ll be ~$53k cheaper to go w/ the conventional. If price increased 20% over the next 8 years, it’ll be ~$119k cheaper to go w/ the conventional loan. I did not take tax deduction into consideration. It might add a few grand in the FHA favor but it wouldn’t change the overall picture. FHA seems to be a good idea, only if you HAVE to buy now and plan to walk after 5-8 years and price drop. If you don’t have to buy now, rent would be a better option.

[an]

[quote=scaredycat]use wife’s credit?[/quote]
Assuming your wife makes as much as you, then that would be a decent plan B. If you think price will drop another 20% where you plan to buy and you’ll walk w/in 5-8 years, then it doesn’t matter if PMI/MMIP doesn’t end after 5 years, it’s still cheaper to go the FHA route. If it doesn’t drop 20% down or if your time frame changed to 10+ years, then that would totally change the calculation. What’s the chances we’ll see 20+% depreciation in the next 5-8 years in the price range you’re looking to buy. That’s the question you have to ask yourself. I still think rent and build up an even bigger down payment/cash reserve would be a better option if your plan is to only stay there for 5-8 years (unless inflation start to pick up and price starts to head north).

Regarding PMI/MMIP, if price keep on falling and LTV doesn’t get to 80% for a very long time, is there a time limit for PMI/MMIP?

Here are some scenario and # for you to chew over. Assuming the house is $400k, rates for conventional is 4.75% and rates for FHA is 5.375% w/ 1.5% upfront cost roll into the loan and 0.5% MMIP. If price drop 20% in 8 years, it’ll be ~$26k cheaper to go w/ the FHA route. If price stayed flat over the next 8 years, it’ll be ~$53k cheaper to go w/ the conventional. If price increased 20% over the next 8 years, it’ll be ~$119k cheaper to go w/ the conventional loan. I did not take tax deduction into consideration. It might add a few grand in the FHA favor but it wouldn’t change the overall picture. FHA seems to be a good idea, only if you HAVE to buy now and plan to walk after 5-8 years and price drop. If you don’t have to buy now, rent would be a better option.

[an]

[quote=scaredycat]use wife’s credit?[/quote]
Assuming your wife makes as much as you, then that would be a decent plan B. If you think price will drop another 20% where you plan to buy and you’ll walk w/in 5-8 years, then it doesn’t matter if PMI/MMIP doesn’t end after 5 years, it’s still cheaper to go the FHA route. If it doesn’t drop 20% down or if your time frame changed to 10+ years, then that would totally change the calculation. What’s the chances we’ll see 20+% depreciation in the next 5-8 years in the price range you’re looking to buy. That’s the question you have to ask yourself. I still think rent and build up an even bigger down payment/cash reserve would be a better option if your plan is to only stay there for 5-8 years (unless inflation start to pick up and price starts to head north).

Regarding PMI/MMIP, if price keep on falling and LTV doesn’t get to 80% for a very long time, is there a time limit for PMI/MMIP?

Here are some scenario and # for you to chew over. Assuming the house is $400k, rates for conventional is 4.75% and rates for FHA is 5.375% w/ 1.5% upfront cost roll into the loan and 0.5% MMIP. If price drop 20% in 8 years, it’ll be ~$26k cheaper to go w/ the FHA route. If price stayed flat over the next 8 years, it’ll be ~$53k cheaper to go w/ the conventional. If price increased 20% over the next 8 years, it’ll be ~$119k cheaper to go w/ the conventional loan. I did not take tax deduction into consideration. It might add a few grand in the FHA favor but it wouldn’t change the overall picture. FHA seems to be a good idea, only if you HAVE to buy now and plan to walk after 5-8 years and price drop. If you don’t have to buy now, rent would be a better option.

[an]

[quote=scaredycat]use wife’s credit?[/quote]
Assuming your wife makes as much as you, then that would be a decent plan B. If you think price will drop another 20% where you plan to buy and you’ll walk w/in 5-8 years, then it doesn’t matter if PMI/MMIP doesn’t end after 5 years, it’s still cheaper to go the FHA route. If it doesn’t drop 20% down or if your time frame changed to 10+ years, then that would totally change the calculation. What’s the chances we’ll see 20+% depreciation in the next 5-8 years in the price range you’re looking to buy. That’s the question you have to ask yourself. I still think rent and build up an even bigger down payment/cash reserve would be a better option if your plan is to only stay there for 5-8 years (unless inflation start to pick up and price starts to head north).

Regarding PMI/MMIP, if price keep on falling and LTV doesn’t get to 80% for a very long time, is there a time limit for PMI/MMIP?

Here are some scenario and # for you to chew over. Assuming the house is $400k, rates for conventional is 4.75% and rates for FHA is 5.375% w/ 1.5% upfront cost roll into the loan and 0.5% MMIP. If price drop 20% in 8 years, it’ll be ~$26k cheaper to go w/ the FHA route. If price stayed flat over the next 8 years, it’ll be ~$53k cheaper to go w/ the conventional. If price increased 20% over the next 8 years, it’ll be ~$119k cheaper to go w/ the conventional loan. I did not take tax deduction into consideration. It might add a few grand in the FHA favor but it wouldn’t change the overall picture. FHA seems to be a good idea, only if you HAVE to buy now and plan to walk after 5-8 years and price drop. If you don’t have to buy now, rent would be a better option.

[scaredyclassic]

AN WROTE:

Did you run the numbers for both? With 20% down and 4.75% rate, your monthly payment would be $1669. With 3.5% down FHA @ 5.375% rate and .5% MMIP, your monthly payment would be $2322.

crunching numbers, what i was thinking was i pay $650 more a month, or about $8,000 a year. But with the tax deduction, I’m really only paying say $5,600 a year more. If I put down 16.5% extra on 400,000, (20-3.5%) then I’m out of pocket $66,000. $5,600 a year x 11 plus years gets me my money back (in dollars that of cours emay be worth quite a bit less). What did i miscalculate?

Seems liek I dont’ start getting a benefit until the final 2/3 of my 30 year mortgage.

note: I could be very wrong on my calculations. I often cannot balance my checkbook, but luckily, I’m not on the edge bouncing checks…

[scaredyclassic]

AN WROTE:

Did you run the numbers for both? With 20% down and 4.75% rate, your monthly payment would be $1669. With 3.5% down FHA @ 5.375% rate and .5% MMIP, your monthly payment would be $2322.

crunching numbers, what i was thinking was i pay $650 more a month, or about $8,000 a year. But with the tax deduction, I’m really only paying say $5,600 a year more. If I put down 16.5% extra on 400,000, (20-3.5%) then I’m out of pocket $66,000. $5,600 a year x 11 plus years gets me my money back (in dollars that of cours emay be worth quite a bit less). What did i miscalculate?

Seems liek I dont’ start getting a benefit until the final 2/3 of my 30 year mortgage.

note: I could be very wrong on my calculations. I often cannot balance my checkbook, but luckily, I’m not on the edge bouncing checks…

[scaredyclassic]

AN WROTE:

Did you run the numbers for both? With 20% down and 4.75% rate, your monthly payment would be $1669. With 3.5% down FHA @ 5.375% rate and .5% MMIP, your monthly payment would be $2322.

crunching numbers, what i was thinking was i pay $650 more a month, or about $8,000 a year. But with the tax deduction, I’m really only paying say $5,600 a year more. If I put down 16.5% extra on 400,000, (20-3.5%) then I’m out of pocket $66,000. $5,600 a year x 11 plus years gets me my money back (in dollars that of cours emay be worth quite a bit less). What did i miscalculate?

Seems liek I dont’ start getting a benefit until the final 2/3 of my 30 year mortgage.

note: I could be very wrong on my calculations. I often cannot balance my checkbook, but luckily, I’m not on the edge bouncing checks…

[scaredyclassic]

AN WROTE:

Did you run the numbers for both? With 20% down and 4.75% rate, your monthly payment would be $1669. With 3.5% down FHA @ 5.375% rate and .5% MMIP, your monthly payment would be $2322.

crunching numbers, what i was thinking was i pay $650 more a month, or about $8,000 a year. But with the tax deduction, I’m really only paying say $5,600 a year more. If I put down 16.5% extra on 400,000, (20-3.5%) then I’m out of pocket $66,000. $5,600 a year x 11 plus years gets me my money back (in dollars that of cours emay be worth quite a bit less). What did i miscalculate?

Seems liek I dont’ start getting a benefit until the final 2/3 of my 30 year mortgage.

note: I could be very wrong on my calculations. I often cannot balance my checkbook, but luckily, I’m not on the edge bouncing checks…

[scaredyclassic]

AN WROTE:

Did you run the numbers for both? With 20% down and 4.75% rate, your monthly payment would be $1669. With 3.5% down FHA @ 5.375% rate and .5% MMIP, your monthly payment would be $2322.

crunching numbers, what i was thinking was i pay $650 more a month, or about $8,000 a year. But with the tax deduction, I’m really only paying say $5,600 a year more. If I put down 16.5% extra on 400,000, (20-3.5%) then I’m out of pocket $66,000. $5,600 a year x 11 plus years gets me my money back (in dollars that of cours emay be worth quite a bit less). What did i miscalculate?

Seems liek I dont’ start getting a benefit until the final 2/3 of my 30 year mortgage.

note: I could be very wrong on my calculations. I often cannot balance my checkbook, but luckily, I’m not on the edge bouncing checks…

[scaredyclassic]

put another way, IMHO, (a) the odds of me wanting to move in 11 years are fairly high, negating benefit of 20% down 30 year loan (the odds of EVERYONE moving in 11 years is very high)..

(b) The odds of my 20% down having the same purchasing power in 11 years is very low. So when i get my money back, I’m probably only going to in reality be getting the equivalent of half of it back in 11 years)

(c) The odds of gold doubling in value sometime over the next 11 years is high

[scaredyclassic]

put another way, IMHO, (a) the odds of me wanting to move in 11 years are fairly high, negating benefit of 20% down 30 year loan (the odds of EVERYONE moving in 11 years is very high)..

(b) The odds of my 20% down having the same purchasing power in 11 years is very low. So when i get my money back, I’m probably only going to in reality be getting the equivalent of half of it back in 11 years)

(c) The odds of gold doubling in value sometime over the next 11 years is high

[scaredyclassic]

put another way, IMHO, (a) the odds of me wanting to move in 11 years are fairly high, negating benefit of 20% down 30 year loan (the odds of EVERYONE moving in 11 years is very high)..

(b) The odds of my 20% down having the same purchasing power in 11 years is very low. So when i get my money back, I’m probably only going to in reality be getting the equivalent of half of it back in 11 years)

(c) The odds of gold doubling in value sometime over the next 11 years is high

[scaredyclassic]

put another way, IMHO, (a) the odds of me wanting to move in 11 years are fairly high, negating benefit of 20% down 30 year loan (the odds of EVERYONE moving in 11 years is very high)..

(b) The odds of my 20% down having the same purchasing power in 11 years is very low. So when i get my money back, I’m probably only going to in reality be getting the equivalent of half of it back in 11 years)

(c) The odds of gold doubling in value sometime over the next 11 years is high

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