- This topic has 56 replies, 16 voices, and was last updated 13 years, 2 months ago by bearishgurl.
-
AuthorPosts
-
November 18, 2011 at 9:24 AM #19302November 18, 2011 at 9:27 AM #733185sdrealtorParticipant
I expected it and more. I expect the others will go up also. We still have another 5 to 10 years to clean up this mess and the government interventions wont stop anytime soon.
November 18, 2011 at 9:35 AM #733189anParticipantAre you just being sarcastic Rich? I’m not shocked at all. I can’t believe it took this long 🙂
November 18, 2011 at 9:50 AM #733190Rich ToscanoKeymaster[quote=AN]Are you just being sarcastic Rich? [/quote]
Most certainly. The only thing unexpected is that it’s only FHA (for now).
November 18, 2011 at 10:01 AM #733192bearishgurlParticipantIf one borrows the maximum FHA loan amount of $729,750 and puts only 3.5% down on their purchase, their MIP will be HUGE under the new rules.
Up front MIP payment to escrow: $12,771
Monthly MIP payment (into oblivion, lol): $401.36WHO would throw all this money (both up front and monthly) to the wind? Why not take the $12,771 and add it to the downpayment and try to buy FF with a 95% LTV mortgage? (PMI is surely the lesser of two evils.)
If you answer, “persons whose credit score is not high enough to qualify for FF,” then IMHO, those persons have no business purchasing a $750K+ property. Perhaps they need to save far more cash and bring up their scores before purchasing RE.
An FHA loan limit of $729,750 will quickly prove to be another gubment knee-jerk debacle which will most certainly self-detonate when these borrowers can no longer pay their HUGE mortgages with monthly MIP wrapped into the required impounds… ESPECIALLY if this new mtg limit will prevail everywhere in the country.
Good L@rd, what were the powers-that-be thinking here?? :=[
November 18, 2011 at 10:06 AM #733194Rich ToscanoKeymasterPS – Anyone who thinks I am actually shocked is invited to watch this 20-second clip: http://www.youtube.com/watch?v=-Gf8NK1WAOc
November 18, 2011 at 10:09 AM #733195Rich ToscanoKeymaster[quote=bearishgurl] Why not take the $12,771 and add it to the downpayment and try to buy FF with a 95% LTV mortgage? (PMI is surely the lesser of two evils.)
[/quote]Because FHA loans are assumable.
November 18, 2011 at 10:20 AM #733197bearishgurlParticipant[quote=Rich Toscano][quote=bearishgurl] Why not take the $12,771 and add it to the downpayment and try to buy FF with a 95% LTV mortgage? (PMI is surely the lesser of two evils.)
[/quote]Because FHA loans are assumable.[/quote]
IMO, current MIP is a VERY high price to pay for “assumability.”
Acc to some on this board . . . ahem . . . “assumability” means nothing because a buyer who wishes to assume today must jump thru all the same hoops as a buyer qualifying straight away for a new mortgage.
Rich, do you know what the “assumption fee” is on FHA loans?
November 18, 2011 at 10:31 AM #733198scaredyclassicParticipantI am not shocked but I am a little surprised even though I pretty much expected it.
November 18, 2011 at 10:32 AM #733199(former)FormerSanDieganParticipant[quote=bearishgurl]IMO, current MIP is a VERY high price to pay for “assumability.”
Acc to some on this board . . . ahem . . . “assumability” means nothing because a buyer who wishes to assume today must jump thru all the same hoops as a buyer qualifying straight away for a new mortgage.
Rich, do you know what the “assumption fee” is on FHA loans?[/quote]
Whether the MIP is a high price to pay depends on future interest rates. I agree that $400 per month on $700K is a lot to pay to assume a 4% rate in a 4% rate environment (~today’s rates)
BUT, what if rates go up to 7%. At that point $400 per month is a good deal to get a 4% interest rate.
November 18, 2011 at 10:42 AM #733200Rich ToscanoKeymasterYes, what FSD wrote sums up my opinion. I think there is a high probability of much higher rates, so assumability strikes me as very valuable. I admit that I haven’t actually run the numbers, though. (That said, the assumption fee seems nominal, as far as I can tell).
November 18, 2011 at 10:44 AM #733201enron_by_the_seaParticipantWhat happened to the Tea Party? Weren’t they supposed to stop all this?
November 18, 2011 at 10:49 AM #733202bearishgurlParticipantProposed new FHA purchase in SD, CA using new loan limit of $729,750 (with $12771 MIP escrow deposit):
$748,450 purch price (no HOA or MR)
$ 18,700 3.5% downpayment$729,750 Mortgage at 4% fixed
P&I = $3480.91
Taxes = 729.74
Ins = 161.17 (non fire-risk area)
MIP = 401.36Total $4773.18 (mo PITI + MIP)
Amount of MIP deposited (assuming all pymts are timely made):
by 13th month of ownership = $17,587.64
by 25th month of ownership = $22,403.96
by 37th month of ownership = $27,220.28Is this enough cash to protect HUD (another acronym for “gubment”) if this borrower should default in these first three critical years??
I don’t think so. Assuming the loan doesn’t go bad until the 37th month, $27,220.28/$3,480.91 = 7.82 months of P&I in “reserves.” And this doesn’t even cover late fees, trustees fees, unpaid taxes, insurance and clean up/maintenance on the REO!
And I’ve never met a HUD home that took less than nine months to get there. In recent years it has taken up to three years for an FHA mortgage to foreclose.
I don’t think I need to ask here who will end up footing this bill …. :=0
November 18, 2011 at 10:53 AM #733203sdrealtorParticipantSorry but you are twisting my words. Assuming your old TOXIC OPTION ARM today when rates are sub 4% means NOTHING. In the future, someone being able to assume a 30 year FIXED rate loan at 3.75% could have lots of value. Sorry….you lose again BG
November 18, 2011 at 10:58 AM #733204(former)FormerSanDieganParticipant[quote=bearishgurl]
Amount of MIP deposited (assuming all pymts are timely made):by 13th month of ownership = $17,587.64
by 25th month of ownership = $22,403.96
by 37th month of ownership = $27,220.28Is this enough cash to protect HUD (another acronym for “gubment”) if this borrower should default in these first three critical years??
[/quote]
It depends on the default rate…
If the default rate is 10%, that’s 175K per foreclosure through month 13 and 275K per foreclosure through month 37.
If the 3-year default rate is 10%, I don;t think HUD would lose much on that 730K loan. (asusming prices don’tall more than 10%).
In fact if they can charge these rates and get a 10% default rate in a market where prices are flat, they will make money hand over fist (and make up for the losses they are currently suffering on previous loans where the rates they set were too low).
-
AuthorPosts
- You must be logged in to reply to this topic.