[CA renter]

I hadn’t thought about refinancing after 5 years. Wonder how that will work out. Hopefully rates will be in the double-digits by then.

I have NO sympathy for those who overpaid for a house and can no longer make their payments. They **should be foreclosed on** and the fact that so many are whining about the equity sharing tells me they are the most ungrateful bunch of leeches ever.

From Bankrate:

Again, there is a catch. If you take refuge in this program, you’ll have to share your home-price appreciation with the FHA. If you sell the house (or refinance the loan) less than a year after refinancing into the FHA loan, the FHA gets all of the house price appreciation. The FHA’s cut decreases over the next five years — but never goes below 50 percent.

What does this mean to the borrower? Take the example above. You refinanced when the house was appraised at $100,000. A little over two years later, you sell the house for $120,000. You split that $20,000 difference with the FHA. In this case, because it’s between two and three years later, the FHA gets 80 percent. The FHA would get $16,000 and you would get $4,000.

The equity-sharing arrangement goes like this: If you refinance or sell less than a year after getting the FHA loan, the government gets 100 percent of the home price appreciation. If it’s more than a year but less than two years, the FHA gets 90 percent. The FHA’s cut then decreases by 10 percent until the five-year mark. Anytime after that, the FHA gets half of the appreciation, no matter how long you have the loan or own the house.

This arrangement will encourage homeowners to keep their FHA-insured mortgages for at least five years, but to refinance before home prices zoom upward again.

http://www.bankrate.com/brm/news/mortgages/housing-bill-20080725a1.asp

[CA renter]

Whenever the RE cycle bottoms, you will usually see PITI payments are lower than rents.

Why? Because the barrier to ownership used to be a good down payment and good credit with high qualifying standards. Once you got that DP, you could usually do better than renting, especially with the mortgage deduction.

As credit tightens, I believe we will see this again — even in the better areas, with a few exceptions.

[CA renter]

Whenever the RE cycle bottoms, you will usually see PITI payments are lower than rents.

Why? Because the barrier to ownership used to be a good down payment and good credit with high qualifying standards. Once you got that DP, you could usually do better than renting, especially with the mortgage deduction.

As credit tightens, I believe we will see this again — even in the better areas, with a few exceptions.

[CA renter]

Whenever the RE cycle bottoms, you will usually see PITI payments are lower than rents.

Why? Because the barrier to ownership used to be a good down payment and good credit with high qualifying standards. Once you got that DP, you could usually do better than renting, especially with the mortgage deduction.

As credit tightens, I believe we will see this again — even in the better areas, with a few exceptions.

[CA renter]

Whenever the RE cycle bottoms, you will usually see PITI payments are lower than rents.

Why? Because the barrier to ownership used to be a good down payment and good credit with high qualifying standards. Once you got that DP, you could usually do better than renting, especially with the mortgage deduction.

As credit tightens, I believe we will see this again — even in the better areas, with a few exceptions.

[CA renter]

Whenever the RE cycle bottoms, you will usually see PITI payments are lower than rents.

Why? Because the barrier to ownership used to be a good down payment and good credit with high qualifying standards. Once you got that DP, you could usually do better than renting, especially with the mortgage deduction.

As credit tightens, I believe we will see this again — even in the better areas, with a few exceptions.

[CA renter]

surveyor,

I think your assumptions are excellent. The entire foreclosure “crisis” could have been completely avoided if buyers used conservative guidelines when making a purchase.

We should not assume the mortgage deduction will always be there, especially on investment properties. Same with Prop 13 protection. We have record levels of debt at all levels, and that includes the state and federal governments. They will need to increase revenues, and these protections would be the first things under consideration, if I were a politician.

Inflation was a given when we had the Baby Boomers pushing up prices for things over many decades. The buying power of the Boomers (with good incomes, more stable jobs, better healthcare & pension plans, etc.) is being replaced by the lower incomes of immigrants from poor countries. We also have lower wages & benefits for Americans due to globalization. It is no longer a given that housing prices will rise in perpetuity. We may well see declines for many years, perhaps decades.

Rents do not always go up, and rent increases should not be factored into the equation, IMO. As an investor, I’m looking at what the numbers tell me **right now** and try to consider what obstacles might lie ahead (higher vacancies, recessions, neighborhood deterioration, problem tenants, etc.). If things get better, lovely, but I would never presume they will do so, especially now.

[CA renter]

surveyor,

I think your assumptions are excellent. The entire foreclosure “crisis” could have been completely avoided if buyers used conservative guidelines when making a purchase.

We should not assume the mortgage deduction will always be there, especially on investment properties. Same with Prop 13 protection. We have record levels of debt at all levels, and that includes the state and federal governments. They will need to increase revenues, and these protections would be the first things under consideration, if I were a politician.

Inflation was a given when we had the Baby Boomers pushing up prices for things over many decades. The buying power of the Boomers (with good incomes, more stable jobs, better healthcare & pension plans, etc.) is being replaced by the lower incomes of immigrants from poor countries. We also have lower wages & benefits for Americans due to globalization. It is no longer a given that housing prices will rise in perpetuity. We may well see declines for many years, perhaps decades.

Rents do not always go up, and rent increases should not be factored into the equation, IMO. As an investor, I’m looking at what the numbers tell me **right now** and try to consider what obstacles might lie ahead (higher vacancies, recessions, neighborhood deterioration, problem tenants, etc.). If things get better, lovely, but I would never presume they will do so, especially now.

[CA renter]

surveyor,

I think your assumptions are excellent. The entire foreclosure “crisis” could have been completely avoided if buyers used conservative guidelines when making a purchase.

We should not assume the mortgage deduction will always be there, especially on investment properties. Same with Prop 13 protection. We have record levels of debt at all levels, and that includes the state and federal governments. They will need to increase revenues, and these protections would be the first things under consideration, if I were a politician.

Inflation was a given when we had the Baby Boomers pushing up prices for things over many decades. The buying power of the Boomers (with good incomes, more stable jobs, better healthcare & pension plans, etc.) is being replaced by the lower incomes of immigrants from poor countries. We also have lower wages & benefits for Americans due to globalization. It is no longer a given that housing prices will rise in perpetuity. We may well see declines for many years, perhaps decades.

Rents do not always go up, and rent increases should not be factored into the equation, IMO. As an investor, I’m looking at what the numbers tell me **right now** and try to consider what obstacles might lie ahead (higher vacancies, recessions, neighborhood deterioration, problem tenants, etc.). If things get better, lovely, but I would never presume they will do so, especially now.

[CA renter]

surveyor,

I think your assumptions are excellent. The entire foreclosure “crisis” could have been completely avoided if buyers used conservative guidelines when making a purchase.

We should not assume the mortgage deduction will always be there, especially on investment properties. Same with Prop 13 protection. We have record levels of debt at all levels, and that includes the state and federal governments. They will need to increase revenues, and these protections would be the first things under consideration, if I were a politician.

Inflation was a given when we had the Baby Boomers pushing up prices for things over many decades. The buying power of the Boomers (with good incomes, more stable jobs, better healthcare & pension plans, etc.) is being replaced by the lower incomes of immigrants from poor countries. We also have lower wages & benefits for Americans due to globalization. It is no longer a given that housing prices will rise in perpetuity. We may well see declines for many years, perhaps decades.

Rents do not always go up, and rent increases should not be factored into the equation, IMO. As an investor, I’m looking at what the numbers tell me **right now** and try to consider what obstacles might lie ahead (higher vacancies, recessions, neighborhood deterioration, problem tenants, etc.). If things get better, lovely, but I would never presume they will do so, especially now.

[CA renter]

surveyor,

I think your assumptions are excellent. The entire foreclosure “crisis” could have been completely avoided if buyers used conservative guidelines when making a purchase.

We should not assume the mortgage deduction will always be there, especially on investment properties. Same with Prop 13 protection. We have record levels of debt at all levels, and that includes the state and federal governments. They will need to increase revenues, and these protections would be the first things under consideration, if I were a politician.

Inflation was a given when we had the Baby Boomers pushing up prices for things over many decades. The buying power of the Boomers (with good incomes, more stable jobs, better healthcare & pension plans, etc.) is being replaced by the lower incomes of immigrants from poor countries. We also have lower wages & benefits for Americans due to globalization. It is no longer a given that housing prices will rise in perpetuity. We may well see declines for many years, perhaps decades.

Rents do not always go up, and rent increases should not be factored into the equation, IMO. As an investor, I’m looking at what the numbers tell me **right now** and try to consider what obstacles might lie ahead (higher vacancies, recessions, neighborhood deterioration, problem tenants, etc.). If things get better, lovely, but I would never presume they will do so, especially now.

[CA renter]

All excellent points, SDR. Thank you!

[CA renter]

All excellent points, SDR. Thank you!

[CA renter]

All excellent points, SDR. Thank you!

[CA renter]

All excellent points, SDR. Thank you!

[Author]

Posts