FHA loans; why not? – Page 34 – Piggington's Econo-Almanac

This topic has 580 replies, 19 voices, and was last updated 14 years, 11 months ago by scaredyclassic.

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December 2, 2009 at 12:48 PM #490279

scaredyclassic
Participant

yes, but of course all of this goes out the window if in fact FHA PMI can be cancelled after a certain number of years. wher eis that FHA guru guy who was chased off the board a while back?

also, of cours,e there has to be some return imputed to the 66K in the fha scenario , since the 80k going into the house is getting a gain imputed to it. it mightbe very low, the bank ate of interest, or itmight be higher.

December 2, 2009 at 1:00 PM #489421

scaredyclassic
Participant

so what i ultimately see is

FHA

-20% leaves you DOWN 106,000

flat leaves you DOWN 17,000

+20% leaves you UP 69,000

20%

-20% leaves you DOWN 84,000

flat leaves you UP 76,000

+20% leave syou UP 155,000

HOWEVER, you have to take into account what’s happening with your 66k you didn’t put into the deal.

if your $66,000 earned 10% a year, you’d end up with 75k extra in the FHA scenario, at 6% you’d have an extra 45,000, and at 3% (all over 8 years) you’d have an extra 23,000. I’ll redo the numbers above using 6%, as a midpoint…

FHA

-20% leaves you DOWN 106,000 plus 45k = DOWN 61,000

flat leaves you DOWN 17,000 plus 45k = UP 28,000

+20% leaves you UP 69,000 plus 45k = UP 114,000

The numbers come out a HELL of a lot closer if you earn 6% on the monies you didn’t put into the real estate deal…at 10%, you do much better on the 20% down scenario, and are close to break even on the other scenarios.

Correct?

December 2, 2009 at 1:00 PM #489587

scaredyclassic
Participant

so what i ultimately see is

FHA

-20% leaves you DOWN 106,000

flat leaves you DOWN 17,000

+20% leaves you UP 69,000

20%

-20% leaves you DOWN 84,000

flat leaves you UP 76,000

+20% leave syou UP 155,000

HOWEVER, you have to take into account what’s happening with your 66k you didn’t put into the deal.

if your $66,000 earned 10% a year, you’d end up with 75k extra in the FHA scenario, at 6% you’d have an extra 45,000, and at 3% (all over 8 years) you’d have an extra 23,000. I’ll redo the numbers above using 6%, as a midpoint…

FHA

-20% leaves you DOWN 106,000 plus 45k = DOWN 61,000

flat leaves you DOWN 17,000 plus 45k = UP 28,000

+20% leaves you UP 69,000 plus 45k = UP 114,000

The numbers come out a HELL of a lot closer if you earn 6% on the monies you didn’t put into the real estate deal…at 10%, you do much better on the 20% down scenario, and are close to break even on the other scenarios.

Correct?

December 2, 2009 at 1:00 PM #489970

scaredyclassic
Participant

so what i ultimately see is

FHA

-20% leaves you DOWN 106,000

flat leaves you DOWN 17,000

+20% leaves you UP 69,000

20%

-20% leaves you DOWN 84,000

flat leaves you UP 76,000

+20% leave syou UP 155,000

HOWEVER, you have to take into account what’s happening with your 66k you didn’t put into the deal.

if your $66,000 earned 10% a year, you’d end up with 75k extra in the FHA scenario, at 6% you’d have an extra 45,000, and at 3% (all over 8 years) you’d have an extra 23,000. I’ll redo the numbers above using 6%, as a midpoint…

FHA

-20% leaves you DOWN 106,000 plus 45k = DOWN 61,000

flat leaves you DOWN 17,000 plus 45k = UP 28,000

+20% leaves you UP 69,000 plus 45k = UP 114,000

The numbers come out a HELL of a lot closer if you earn 6% on the monies you didn’t put into the real estate deal…at 10%, you do much better on the 20% down scenario, and are close to break even on the other scenarios.

Correct?

December 2, 2009 at 1:00 PM #490058

scaredyclassic
Participant

so what i ultimately see is

FHA

-20% leaves you DOWN 106,000

flat leaves you DOWN 17,000

+20% leaves you UP 69,000

20%

-20% leaves you DOWN 84,000

flat leaves you UP 76,000

+20% leave syou UP 155,000

HOWEVER, you have to take into account what’s happening with your 66k you didn’t put into the deal.

if your $66,000 earned 10% a year, you’d end up with 75k extra in the FHA scenario, at 6% you’d have an extra 45,000, and at 3% (all over 8 years) you’d have an extra 23,000. I’ll redo the numbers above using 6%, as a midpoint…

FHA

-20% leaves you DOWN 106,000 plus 45k = DOWN 61,000

flat leaves you DOWN 17,000 plus 45k = UP 28,000

+20% leaves you UP 69,000 plus 45k = UP 114,000

The numbers come out a HELL of a lot closer if you earn 6% on the monies you didn’t put into the real estate deal…at 10%, you do much better on the 20% down scenario, and are close to break even on the other scenarios.

Correct?

December 2, 2009 at 1:00 PM #490289

scaredyclassic
Participant

so what i ultimately see is

FHA

-20% leaves you DOWN 106,000

flat leaves you DOWN 17,000

+20% leaves you UP 69,000

20%

-20% leaves you DOWN 84,000

flat leaves you UP 76,000

+20% leave syou UP 155,000

HOWEVER, you have to take into account what’s happening with your 66k you didn’t put into the deal.

if your $66,000 earned 10% a year, you’d end up with 75k extra in the FHA scenario, at 6% you’d have an extra 45,000, and at 3% (all over 8 years) you’d have an extra 23,000. I’ll redo the numbers above using 6%, as a midpoint…

FHA

-20% leaves you DOWN 106,000 plus 45k = DOWN 61,000

flat leaves you DOWN 17,000 plus 45k = UP 28,000

+20% leaves you UP 69,000 plus 45k = UP 114,000

The numbers come out a HELL of a lot closer if you earn 6% on the monies you didn’t put into the real estate deal…at 10%, you do much better on the 20% down scenario, and are close to break even on the other scenarios.

Correct?

December 2, 2009 at 1:04 PM #489431

UCGal
Participant

[quote=scaredycat]yes, but of course all of this goes out the window if in fact FHA PMI can be cancelled after a certain number of years. wher eis that FHA guru guy who was chased off the board a while back?

also, of cours,e there has to be some return imputed to the 66K in the fha scenario , since the 80k going into the house is getting a gain imputed to it. it mightbe very low, the bank ate of interest, or itmight be higher.[/quote]

scaredycat –
The google is our friend. I was curious about this so I googled.
It appears that the MIP can be removed from the FHA loan if three conditions are met:
– The loan term is for 15 or more years.
– The MIP has been paid for 5 years.
– The Loan to Value is at least 78%.

If you’re expecting the value of the house to decline – you can’t assume you’ll qualify for the 78% LTV in the 5 years. So if you’re going with FHA for the lower down, out of fear of losing the down payment in a declining market – you should NOT count on the MIP going away since, clearly, you’re assuming a declining market and your LTV will stay high as the value goes down.
(Does that make any sense?)

http://www.ehow.com/how_4574989_mortgage-insurance-fha-year-loan.html

http://www.bills.com/fha-mortgage-insurance/

December 2, 2009 at 1:04 PM #489597

UCGal
Participant

[quote=scaredycat]yes, but of course all of this goes out the window if in fact FHA PMI can be cancelled after a certain number of years. wher eis that FHA guru guy who was chased off the board a while back?

also, of cours,e there has to be some return imputed to the 66K in the fha scenario , since the 80k going into the house is getting a gain imputed to it. it mightbe very low, the bank ate of interest, or itmight be higher.[/quote]

scaredycat –
The google is our friend. I was curious about this so I googled.
It appears that the MIP can be removed from the FHA loan if three conditions are met:
– The loan term is for 15 or more years.
– The MIP has been paid for 5 years.
– The Loan to Value is at least 78%.

If you’re expecting the value of the house to decline – you can’t assume you’ll qualify for the 78% LTV in the 5 years. So if you’re going with FHA for the lower down, out of fear of losing the down payment in a declining market – you should NOT count on the MIP going away since, clearly, you’re assuming a declining market and your LTV will stay high as the value goes down.
(Does that make any sense?)

http://www.ehow.com/how_4574989_mortgage-insurance-fha-year-loan.html

http://www.bills.com/fha-mortgage-insurance/

December 2, 2009 at 1:04 PM #489980

UCGal
Participant

[quote=scaredycat]yes, but of course all of this goes out the window if in fact FHA PMI can be cancelled after a certain number of years. wher eis that FHA guru guy who was chased off the board a while back?

also, of cours,e there has to be some return imputed to the 66K in the fha scenario , since the 80k going into the house is getting a gain imputed to it. it mightbe very low, the bank ate of interest, or itmight be higher.[/quote]

scaredycat –
The google is our friend. I was curious about this so I googled.
It appears that the MIP can be removed from the FHA loan if three conditions are met:
– The loan term is for 15 or more years.
– The MIP has been paid for 5 years.
– The Loan to Value is at least 78%.

If you’re expecting the value of the house to decline – you can’t assume you’ll qualify for the 78% LTV in the 5 years. So if you’re going with FHA for the lower down, out of fear of losing the down payment in a declining market – you should NOT count on the MIP going away since, clearly, you’re assuming a declining market and your LTV will stay high as the value goes down.
(Does that make any sense?)

http://www.ehow.com/how_4574989_mortgage-insurance-fha-year-loan.html

http://www.bills.com/fha-mortgage-insurance/

December 2, 2009 at 1:04 PM #490068

UCGal
Participant

[quote=scaredycat]yes, but of course all of this goes out the window if in fact FHA PMI can be cancelled after a certain number of years. wher eis that FHA guru guy who was chased off the board a while back?

also, of cours,e there has to be some return imputed to the 66K in the fha scenario , since the 80k going into the house is getting a gain imputed to it. it mightbe very low, the bank ate of interest, or itmight be higher.[/quote]

scaredycat –
The google is our friend. I was curious about this so I googled.
It appears that the MIP can be removed from the FHA loan if three conditions are met:
– The loan term is for 15 or more years.
– The MIP has been paid for 5 years.
– The Loan to Value is at least 78%.

If you’re expecting the value of the house to decline – you can’t assume you’ll qualify for the 78% LTV in the 5 years. So if you’re going with FHA for the lower down, out of fear of losing the down payment in a declining market – you should NOT count on the MIP going away since, clearly, you’re assuming a declining market and your LTV will stay high as the value goes down.
(Does that make any sense?)

http://www.ehow.com/how_4574989_mortgage-insurance-fha-year-loan.html

http://www.bills.com/fha-mortgage-insurance/

December 2, 2009 at 1:04 PM #490299

UCGal
Participant

[quote=scaredycat]yes, but of course all of this goes out the window if in fact FHA PMI can be cancelled after a certain number of years. wher eis that FHA guru guy who was chased off the board a while back?

also, of cours,e there has to be some return imputed to the 66K in the fha scenario , since the 80k going into the house is getting a gain imputed to it. it mightbe very low, the bank ate of interest, or itmight be higher.[/quote]

scaredycat –
The google is our friend. I was curious about this so I googled.
It appears that the MIP can be removed from the FHA loan if three conditions are met:
– The loan term is for 15 or more years.
– The MIP has been paid for 5 years.
– The Loan to Value is at least 78%.

If you’re expecting the value of the house to decline – you can’t assume you’ll qualify for the 78% LTV in the 5 years. So if you’re going with FHA for the lower down, out of fear of losing the down payment in a declining market – you should NOT count on the MIP going away since, clearly, you’re assuming a declining market and your LTV will stay high as the value goes down.
(Does that make any sense?)

http://www.ehow.com/how_4574989_mortgage-insurance-fha-year-loan.html

http://www.bills.com/fha-mortgage-insurance/

December 2, 2009 at 1:04 PM #489436

scaredyclassic
Participant

but i agree, it all gets kind of icky when you take taxes into account, and tax free home sales, and who knows what the laws will be in 8 years…

it just seems incomplete for the 20% down int he real estate deal to get the benefit of a gain in the house price, while the 66kon the sidelines gets NO gain…

December 2, 2009 at 1:04 PM #489602

scaredyclassic
Participant

but i agree, it all gets kind of icky when you take taxes into account, and tax free home sales, and who knows what the laws will be in 8 years…

it just seems incomplete for the 20% down int he real estate deal to get the benefit of a gain in the house price, while the 66kon the sidelines gets NO gain…

December 2, 2009 at 1:04 PM #489985

scaredyclassic
Participant

but i agree, it all gets kind of icky when you take taxes into account, and tax free home sales, and who knows what the laws will be in 8 years…

it just seems incomplete for the 20% down int he real estate deal to get the benefit of a gain in the house price, while the 66kon the sidelines gets NO gain…

December 2, 2009 at 1:04 PM #490073

scaredyclassic
Participant

but i agree, it all gets kind of icky when you take taxes into account, and tax free home sales, and who knows what the laws will be in 8 years…

it just seems incomplete for the 20% down int he real estate deal to get the benefit of a gain in the house price, while the 66kon the sidelines gets NO gain…
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