FHA loans; why not?

[scaredyclassic]

it just seem slike, the us govt will do everything in tis ower to keep from losing 20% over 8 years. with the full faith and credit of the USA behind me, how can i lose on the (relatively) modest and conservative bet? it’s such a low expectation, afterall! still, in my minds eye, i can see flatness or worse in housing prices for a decade. every step to preserve value prolongs the inevitable…

[UCGal]

[quote=scaredycat]i see the numbers, I understand my worldview, but I cannot figure out what is the best thing to do. I am leaning toward 20% down, buy the interest rate down as low as possible and just hunker down and hopefully wait out the sh*tstorm I fully expect.[/quote]

You need to run the #’s on buying down the interest rate – determine when the break even point is for the points/fees. And figure out if you’ll likely to still be in that loan at that point. Each person’s time horizon is different. But that’s a simple calc. HLS has some calculators on his website you can “what if” the numbers. I used them a lot when I refi’d earlier this year, comparing rates from different sources.

[UCGal]

[quote=scaredycat]i see the numbers, I understand my worldview, but I cannot figure out what is the best thing to do. I am leaning toward 20% down, buy the interest rate down as low as possible and just hunker down and hopefully wait out the sh*tstorm I fully expect.[/quote]

You need to run the #’s on buying down the interest rate – determine when the break even point is for the points/fees. And figure out if you’ll likely to still be in that loan at that point. Each person’s time horizon is different. But that’s a simple calc. HLS has some calculators on his website you can “what if” the numbers. I used them a lot when I refi’d earlier this year, comparing rates from different sources.

[UCGal]

[quote=scaredycat]i see the numbers, I understand my worldview, but I cannot figure out what is the best thing to do. I am leaning toward 20% down, buy the interest rate down as low as possible and just hunker down and hopefully wait out the sh*tstorm I fully expect.[/quote]

You need to run the #’s on buying down the interest rate – determine when the break even point is for the points/fees. And figure out if you’ll likely to still be in that loan at that point. Each person’s time horizon is different. But that’s a simple calc. HLS has some calculators on his website you can “what if” the numbers. I used them a lot when I refi’d earlier this year, comparing rates from different sources.

[UCGal]

[quote=scaredycat]i see the numbers, I understand my worldview, but I cannot figure out what is the best thing to do. I am leaning toward 20% down, buy the interest rate down as low as possible and just hunker down and hopefully wait out the sh*tstorm I fully expect.[/quote]

You need to run the #’s on buying down the interest rate – determine when the break even point is for the points/fees. And figure out if you’ll likely to still be in that loan at that point. Each person’s time horizon is different. But that’s a simple calc. HLS has some calculators on his website you can “what if” the numbers. I used them a lot when I refi’d earlier this year, comparing rates from different sources.

[UCGal]

[quote=scaredycat]i see the numbers, I understand my worldview, but I cannot figure out what is the best thing to do. I am leaning toward 20% down, buy the interest rate down as low as possible and just hunker down and hopefully wait out the sh*tstorm I fully expect.[/quote]

You need to run the #’s on buying down the interest rate – determine when the break even point is for the points/fees. And figure out if you’ll likely to still be in that loan at that point. Each person’s time horizon is different. But that’s a simple calc. HLS has some calculators on his website you can “what if” the numbers. I used them a lot when I refi’d earlier this year, comparing rates from different sources.

[an]

[quote=scaredycat]

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…

…

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?[/quote]
As you posted in your later posts, you’re aware of the taxes, yet, you didn’t calculate the taxes on the income you made on the $66k. Also, what about the $62k savings on the conventional side of price goes down 20% or stay flat? You forgot to ad in those gains as well. Your $62k would grow to $96k after 8 years w/ 10% return, $80k if you have 6% return. So, take $75k-$34k and you get $41k for 10% return before taxes or take $45k-$18k and you get $27k for 6% return before taxes. Take 34% away for taxes and you’re left with $17k or $27k.

[an]

[quote=scaredycat]

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…

…

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?[/quote]
As you posted in your later posts, you’re aware of the taxes, yet, you didn’t calculate the taxes on the income you made on the $66k. Also, what about the $62k savings on the conventional side of price goes down 20% or stay flat? You forgot to ad in those gains as well. Your $62k would grow to $96k after 8 years w/ 10% return, $80k if you have 6% return. So, take $75k-$34k and you get $41k for 10% return before taxes or take $45k-$18k and you get $27k for 6% return before taxes. Take 34% away for taxes and you’re left with $17k or $27k.

[an]

[quote=scaredycat]

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…

…

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?[/quote]
As you posted in your later posts, you’re aware of the taxes, yet, you didn’t calculate the taxes on the income you made on the $66k. Also, what about the $62k savings on the conventional side of price goes down 20% or stay flat? You forgot to ad in those gains as well. Your $62k would grow to $96k after 8 years w/ 10% return, $80k if you have 6% return. So, take $75k-$34k and you get $41k for 10% return before taxes or take $45k-$18k and you get $27k for 6% return before taxes. Take 34% away for taxes and you’re left with $17k or $27k.

[an]

[quote=scaredycat]

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…

…

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?[/quote]
As you posted in your later posts, you’re aware of the taxes, yet, you didn’t calculate the taxes on the income you made on the $66k. Also, what about the $62k savings on the conventional side of price goes down 20% or stay flat? You forgot to ad in those gains as well. Your $62k would grow to $96k after 8 years w/ 10% return, $80k if you have 6% return. So, take $75k-$34k and you get $41k for 10% return before taxes or take $45k-$18k and you get $27k for 6% return before taxes. Take 34% away for taxes and you’re left with $17k or $27k.

[an]

[quote=scaredycat]

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…

…

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?[/quote]
As you posted in your later posts, you’re aware of the taxes, yet, you didn’t calculate the taxes on the income you made on the $66k. Also, what about the $62k savings on the conventional side of price goes down 20% or stay flat? You forgot to ad in those gains as well. Your $62k would grow to $96k after 8 years w/ 10% return, $80k if you have 6% return. So, take $75k-$34k and you get $41k for 10% return before taxes or take $45k-$18k and you get $27k for 6% return before taxes. Take 34% away for taxes and you’re left with $17k or $27k.

[scaredyclassic]

i guess i figure it’s a wash since im paying more tax-deductible interest on the fha loan.

[scaredyclassic]

i guess i figure it’s a wash since im paying more tax-deductible interest on the fha loan.

[scaredyclassic]

i guess i figure it’s a wash since im paying more tax-deductible interest on the fha loan.

[scaredyclassic]

i guess i figure it’s a wash since im paying more tax-deductible interest on the fha loan.

[Author]

Posts