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ParticipantIt’s just that, we’re not in a high inflation period right now and scaredycat is thinking about buying now w/ FHA and walk if he becomes upside down. Which is 3.5%. Which, I think is likely to happen if he buys now. Right now is not a time to speculate in a house that is also your primary resident. Especially if you have a screen name of scaredycat.
Agreed, walking on a 3.5% downturn is just silly. Hell almost everyone loses a ton of money when they first move into a house. The transaction costs of buying and selling are huge.
I’d say the reason to go FHA is if you expect high inflation in the future and you’d rather keep your cash somewhere safe. Of course you pay a penalty for doing so, it probably doesn’t make sense for everyone.
ParticipantHow is holding your cash and great credit bad in that scenario. Inflation doesn’t spike over night. When you see inflation going up at full tilt, you can put that 20% and great credit to good use and buy a house at that time. It’s still much safer than buying w/ FHA now w/ an intention of walking away if the 3.5% down get wiped out. Which, IMHO, is very likely.
It’s not necessarily bad, it’s just that if we get inflation in home prices due to government interference/money printing/etc…, they will rise much faster than your savings since those prices are based on leveraged values. If you are a really good investor this might not affect you, but if you’re like me and lose money on every single investment you make, a house might be a safer bet in the high-inflation scenario. If you expect high inflation in asset prices, you might as well borrow as much money as possible right now and convert it to hard assets.
I wouldn’t advise anyone to walk away just because their house devalued 3.5%. The only reason I can think of for walking is losing your income and not being able to make the payments.
ParticipantHow is holding your cash and great credit bad in that scenario. Inflation doesn’t spike over night. When you see inflation going up at full tilt, you can put that 20% and great credit to good use and buy a house at that time. It’s still much safer than buying w/ FHA now w/ an intention of walking away if the 3.5% down get wiped out. Which, IMHO, is very likely.
It’s not necessarily bad, it’s just that if we get inflation in home prices due to government interference/money printing/etc…, they will rise much faster than your savings since those prices are based on leveraged values. If you are a really good investor this might not affect you, but if you’re like me and lose money on every single investment you make, a house might be a safer bet in the high-inflation scenario. If you expect high inflation in asset prices, you might as well borrow as much money as possible right now and convert it to hard assets.
I wouldn’t advise anyone to walk away just because their house devalued 3.5%. The only reason I can think of for walking is losing your income and not being able to make the payments.
ParticipantHow is holding your cash and great credit bad in that scenario. Inflation doesn’t spike over night. When you see inflation going up at full tilt, you can put that 20% and great credit to good use and buy a house at that time. It’s still much safer than buying w/ FHA now w/ an intention of walking away if the 3.5% down get wiped out. Which, IMHO, is very likely.
It’s not necessarily bad, it’s just that if we get inflation in home prices due to government interference/money printing/etc…, they will rise much faster than your savings since those prices are based on leveraged values. If you are a really good investor this might not affect you, but if you’re like me and lose money on every single investment you make, a house might be a safer bet in the high-inflation scenario. If you expect high inflation in asset prices, you might as well borrow as much money as possible right now and convert it to hard assets.
I wouldn’t advise anyone to walk away just because their house devalued 3.5%. The only reason I can think of for walking is losing your income and not being able to make the payments.
ParticipantHow is holding your cash and great credit bad in that scenario. Inflation doesn’t spike over night. When you see inflation going up at full tilt, you can put that 20% and great credit to good use and buy a house at that time. It’s still much safer than buying w/ FHA now w/ an intention of walking away if the 3.5% down get wiped out. Which, IMHO, is very likely.
It’s not necessarily bad, it’s just that if we get inflation in home prices due to government interference/money printing/etc…, they will rise much faster than your savings since those prices are based on leveraged values. If you are a really good investor this might not affect you, but if you’re like me and lose money on every single investment you make, a house might be a safer bet in the high-inflation scenario. If you expect high inflation in asset prices, you might as well borrow as much money as possible right now and convert it to hard assets.
I wouldn’t advise anyone to walk away just because their house devalued 3.5%. The only reason I can think of for walking is losing your income and not being able to make the payments.
ParticipantHow is holding your cash and great credit bad in that scenario. Inflation doesn’t spike over night. When you see inflation going up at full tilt, you can put that 20% and great credit to good use and buy a house at that time. It’s still much safer than buying w/ FHA now w/ an intention of walking away if the 3.5% down get wiped out. Which, IMHO, is very likely.
It’s not necessarily bad, it’s just that if we get inflation in home prices due to government interference/money printing/etc…, they will rise much faster than your savings since those prices are based on leveraged values. If you are a really good investor this might not affect you, but if you’re like me and lose money on every single investment you make, a house might be a safer bet in the high-inflation scenario. If you expect high inflation in asset prices, you might as well borrow as much money as possible right now and convert it to hard assets.
I wouldn’t advise anyone to walk away just because their house devalued 3.5%. The only reason I can think of for walking is losing your income and not being able to make the payments.
ParticipantRent and keep your 20% down is still the best case scenario. Nothing like keeping your money liquid and your credit pristine, getting ready for a great opportunity.
If we have no or low inflation, that’s correct. However if we have high inflation your savings will erode and home prices will rise.
Government intervention in the housing market will only grow from here. Can you think of anything that the government gets out of once they get into it? Their interventions (both current and future) are going to cost money which will be paid for with Uncle Ben’s helicopter dollars.
What happened when government got involved in health care? Huge inflation in health care costs. Now that the government is increasingly getting involved in the housing market, what will you expect?
ParticipantRent and keep your 20% down is still the best case scenario. Nothing like keeping your money liquid and your credit pristine, getting ready for a great opportunity.
If we have no or low inflation, that’s correct. However if we have high inflation your savings will erode and home prices will rise.
Government intervention in the housing market will only grow from here. Can you think of anything that the government gets out of once they get into it? Their interventions (both current and future) are going to cost money which will be paid for with Uncle Ben’s helicopter dollars.
What happened when government got involved in health care? Huge inflation in health care costs. Now that the government is increasingly getting involved in the housing market, what will you expect?
ParticipantRent and keep your 20% down is still the best case scenario. Nothing like keeping your money liquid and your credit pristine, getting ready for a great opportunity.
If we have no or low inflation, that’s correct. However if we have high inflation your savings will erode and home prices will rise.
Government intervention in the housing market will only grow from here. Can you think of anything that the government gets out of once they get into it? Their interventions (both current and future) are going to cost money which will be paid for with Uncle Ben’s helicopter dollars.
What happened when government got involved in health care? Huge inflation in health care costs. Now that the government is increasingly getting involved in the housing market, what will you expect?
ParticipantRent and keep your 20% down is still the best case scenario. Nothing like keeping your money liquid and your credit pristine, getting ready for a great opportunity.
If we have no or low inflation, that’s correct. However if we have high inflation your savings will erode and home prices will rise.
Government intervention in the housing market will only grow from here. Can you think of anything that the government gets out of once they get into it? Their interventions (both current and future) are going to cost money which will be paid for with Uncle Ben’s helicopter dollars.
What happened when government got involved in health care? Huge inflation in health care costs. Now that the government is increasingly getting involved in the housing market, what will you expect?
ParticipantRent and keep your 20% down is still the best case scenario. Nothing like keeping your money liquid and your credit pristine, getting ready for a great opportunity.
If we have no or low inflation, that’s correct. However if we have high inflation your savings will erode and home prices will rise.
Government intervention in the housing market will only grow from here. Can you think of anything that the government gets out of once they get into it? Their interventions (both current and future) are going to cost money which will be paid for with Uncle Ben’s helicopter dollars.
What happened when government got involved in health care? Huge inflation in health care costs. Now that the government is increasingly getting involved in the housing market, what will you expect?
ParticipantWith FHA, you can get a 6% kickback from the seller, so your downpayment and closing costs would likely be covered. Since there would likely be no up-front payment, if the monthly payment is close to equivalent rent, you essentially have a free call option on any appreciation.
How can you get a 6% kickback from the seller on an FHA loan? I’ve never heard of that.
ParticipantWith FHA, you can get a 6% kickback from the seller, so your downpayment and closing costs would likely be covered. Since there would likely be no up-front payment, if the monthly payment is close to equivalent rent, you essentially have a free call option on any appreciation.
How can you get a 6% kickback from the seller on an FHA loan? I’ve never heard of that.
ParticipantWith FHA, you can get a 6% kickback from the seller, so your downpayment and closing costs would likely be covered. Since there would likely be no up-front payment, if the monthly payment is close to equivalent rent, you essentially have a free call option on any appreciation.
How can you get a 6% kickback from the seller on an FHA loan? I’ve never heard of that.
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