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      07-26-2012, 12:00 PM   #133
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Add the fact that the U.S will probably be in another recession within the next 6 months.. to me, it seems like a very poor decision to buy a house right now unless you feel absolutely confident of your employment, and financial situation for the next decade or so. Otherwise, there is time to wait.
So being career military....would that foot the bill?
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      07-26-2012, 12:14 PM   #134
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So being career military....would that foot the bill?
Foot what bill? The worthless HELOC notes? I'm going to guess another bailout at some point, which would mean the U.S Taxpayer foots the bill.
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      07-26-2012, 01:08 PM   #135
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Don't know what that means, but I was asking if that puts me in a good position to be buying in this market....
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      07-26-2012, 02:32 PM   #136
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Don't know what that means, but I was asking if that puts me in a good position to be buying in this market....
Well, if your income in the military is going to be stable for a long time (which I'm guessing it is), and you're buying something 2.5 to 3.0 your yearly income (max) and put a sizable down payment (20%), I think you will be just fine.
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      07-26-2012, 02:52 PM   #137
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Well, if your income in the military is going to be stable for a long time (which I'm guessing it is), and you're buying something 2.5 to 3.0 your yearly income (max) and put a sizable down payment (20%), I think you will be just fine.


Yeah gonna wait till after my next cruise so I can have some money saved up and enough for a decent down payment.

Now my next question would be, the only things I can find that I feel are reasonably priced in my range and good quality, are town homes. Some of them are pretty big, with two car garages etc, but the HOA and repair assessments that can blindside you sort of scare me. Don't want to randomly get a bill for thousands of dollars because something is structurally wrong with the building or new rood, etc.

Obviously a SFH would be preferred, but am I over stressing the HOA and condo fee things? Aside from the fact that theres other houses connected to some of them, I actually like quite a few, and they seem like good deals, but I still feel like I should stay away since there will be financial requirements eventually that I won't see coming.

I guess what it comes down to, is buying a Townhome a bad idea? Bear in mind I am a single service member with no dependents and when I am actually in the market to buy I will be 27, and it will be my first home.
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      07-26-2012, 03:24 PM   #138
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How should I go about picking a real estate agent? (There has to be some agents on here that can chime in!)

How do I go about knowing what I can afford?

How do I go about estimating monthly bills, etc.




Any other info would be helpful. This is the start of a new life
How do I go about knowing what I can afford?

A good rule of thumb is: your mortgage payment (principal and interest) + taxes + homeowners ins should not exceed 28% of your gross (before tax) income and your total debt payments should not exceed 35% of your gross (before tax) income. This is not only a decent benchmark to manage your expenses but also approximates how a lender will qualify you.

Make yourself a budget and be thorough and honest about it.

How do I go about estimating monthly bills, etc.?

Talk to friends who own homes in your area. Get a sense of all the expenses you may be taking on. Depending on where you live, you'll need to mow, fertilize, and water grass and landscaping. You'll need to pay for utilities. Last but not least you'll need to replace things over time: roofs, air conditioners, paint, appliances. You need to think about how long these things will last and what do they cost to replace, averaged per month. As you look at houses, get a feel for how old these things are in each house.

Once you figure out cost side of things, find a good lender. One example: Check out Provident.com. If you have a good FICO score and can put 20% down, you should see very attractive rates from them. We've done 4 refi's with them on our current house. Very competitive rates and very transparent process. Even if you decide not to use them, their website is Freakin Fantastic for tracking mortgage rates.
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      07-27-2012, 11:03 AM   #139
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Yeah gonna wait till after my next cruise so I can have some money saved up and enough for a decent down payment.

Now my next question would be, the only things I can find that I feel are reasonably priced in my range and good quality, are town homes. Some of them are pretty big, with two car garages etc, but the HOA and repair assessments that can blindside you sort of scare me. Don't want to randomly get a bill for thousands of dollars because something is structurally wrong with the building or new rood, etc.

Obviously a SFH would be preferred, but am I over stressing the HOA and condo fee things? Aside from the fact that theres other houses connected to some of them, I actually like quite a few, and they seem like good deals, but I still feel like I should stay away since there will be financial requirements eventually that I won't see coming.

I guess what it comes down to, is buying a Townhome a bad idea? Bear in mind I am a single service member with no dependents and when I am actually in the market to buy I will be 27, and it will be my first home.

I went the townhouse route myself and would say it's not a bad option for someone who is in a living situation like yours. Keep in mind that most new places whether they be a townhome, condo, or single family home will probably have an HOA of some sort. Having an HOA with dues is not necessarily a bad thing, just do as much research as possible on what the HOA covers out of your dues. With townhomes for example, the HOA usually covers exterior maintenance of the units, so you probably wouldn't have to worry about structural or roof issues. Again, the rules and coverage vary by HOA, so don't assume what they will and won't cover.

Another plus for a townhome is that the HOA typically takes care of the yard and landscape maintenance so that you don't have to worry about it. And if you can, try to get the budget information of the HOA to see how they manage their money. I've seen some ridiculously high monthly HOA dues on some places and haven't been able to determine where that money goes. I feel my monthly dues are reasonable because they cover services like:

landscaping
trash removal
water
community pool
snow removal
exterior painting

In my case, I feel the HOA offers a decent return for the money.

Something else to think about is what your long term plan is for the place you buy. Do you see yourself living there quite a while, or eventually moving on to something different? I picked my place out with the idea of renting it out down the road, knowing that they are popular rental units. Good luck with the search.
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      07-27-2012, 11:09 AM   #140
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Yeah gonna wait till after my next cruise so I can have some money saved up and enough for a decent down payment.

Now my next question would be, the only things I can find that I feel are reasonably priced in my range and good quality, are town homes. Some of them are pretty big, with two car garages etc, but the HOA and repair assessments that can blindside you sort of scare me. Don't want to randomly get a bill for thousands of dollars because something is structurally wrong with the building or new rood, etc.

Obviously a SFH would be preferred, but am I over stressing the HOA and condo fee things? Aside from the fact that theres other houses connected to some of them, I actually like quite a few, and they seem like good deals, but I still feel like I should stay away since there will be financial requirements eventually that I won't see coming.

I guess what it comes down to, is buying a Townhome a bad idea? Bear in mind I am a single service member with no dependents and when I am actually in the market to buy I will be 27, and it will be my first home.
It's simply a bad market to buy for the top 20 metros (not sure where you are right now). Inventory is down, and IMO, being artificially constrained. So you have a few people competing for the same stale listings. The gov't has managed to create a false bottom to the market by helping mortgage rates reach new lows, and having a tacit agreement with banks to allow them to hold inventory off the market.

As for the townhome vs SFR debate, that's a personal choice. For me, I would always choose a SFR over a townhome or condo. They tend to hold value much better, and I'm too old to share walls, yards, or driveways. I like to have my own separate space.

HOA fees aren't a huge deal depending on what you get. Even SFR have HOA fees. What you want to figure out is, what does the HOA pay for. If you pay $250 a month, and you get pools, a gym, a huge maintained park, and other amenities, then you have to decide if that's worth it. I pay a $200 HOA, but it includes a gated community, pools, and a clubhouse/gym. I consider it worth it to me, but others may not. So it all depends.

Random assessments are a risk, but so is random maintenance problems you will encounter while owning a home, replacing a part of your roof for instance, or painting your exterior. This is what a lot of assessments will cover. In general you should always have some money set aside for home maintenance so it's not a sticker shock when you actually have to do it.
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      07-27-2012, 11:49 AM   #141
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Here is my experience on Townhome and it was our first buy as well. As MediaArtist said, they tend to not hold their value, true, but when markets fall and that seems to be the on going trend right now, townhome value usually drop first but not as much followed by SFH but they tend to come back faster then SFH. Also if you had to move and the value is down, they are usually much easier to rent than a SFH.

I agreed having to pay the HOA fees was a pain and saw no value in it since I usually did all my own work. However after many years of having my own place and going through some crazy weather that destroyed the yard and such it is costing a lot to replace it all. Homes can be a lot more costly. If you have a good HOA and they maintain everything all the time you will never get into the big costly things. Also, one thing you need to look at especially with HOA who take care of the outside of the townhome like Roofs and streets and stuff, make sure they are collecting reserves on ever HOA payment. If they are not, you could be in for one large assessment when major repairs are need like everyone's roof needing replaced in 20 yrs.

My HOA had did a pretty good job of collecting and investing reserves they only thing they did not do well was factor in inflation, so they budgeted $100K to do the roofs when they hit 20yrs but it really cost $120K their estimated was 10Yr old. So the 150 Town homes were hit with a $20K bill, but they broke it up over 2yr which was easier to take.

When you buy a place with a HOA they should give you the budget and you want to look at it closely to make sure they covering standard maintenance as well as reserving for the big ticket items.

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      07-27-2012, 12:31 PM   #142
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Cool guys, appreciate the advice.

I think one of the pros of Townhome in my case would be, with me being gone on deployments a lot, that I don't have to worry about getting lawn service or anything like that, since someone else is keeping up the exterior of the place.

Im probably about a year and a half ahead of myself, but I'm just excited at the prospect of not throwing my money away that the gov gives me specifically for housing every month towards rent. In reality things could change a lot by the time I am actually ready to buy, but it never hurts to have an idea.
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      07-27-2012, 05:32 PM   #143
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Something else to think about is what your long term plan is for the place you buy. Do you see yourself living there quite a while, or eventually moving on to something different? I picked my place out with the idea of renting it out down the road, knowing that they are popular rental units. Good luck with the search.
Well I'm hoping for long tern, but its not a guarantee. I can say that I will at least be there for 6 years. Even if I had to transfer somewhere else, I would intend on keeping it however possible whether renting or whatever. But I am honestly hoping to get there and stay there through retirement, but as they say, the only sure things in life are death and taxes.
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      07-28-2012, 10:49 AM   #144
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Its easier for guys in the states to buy a house.. So much cheaper than here in Vancouver... I've been condo shopping recently and it pains me to part with so much money for what I'd be getting here.. I was looking at a 1600 sqft condo and it was selling for 970k before taxes.. Other option was to buy two small condos and connect them together but it still comes up to almost a mil after tax..

I can get a $3 million mansion in the states compared to a three bed room house in a good neighborhood here..
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      07-28-2012, 10:59 AM   #145
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To OP:

You mention being single w/ no dependents. I'm in the same boat. I purchased a $232K house using FHA. Put 3.5% down. Had 11K saved up after closing. Spent about 6K of that buying appliances (house was bank owned and old owners removed stove, microwave, 6 ceiling fans, refrigerator, and dishwasher).

My house is 3000 sq ft and 5 bedrooms. I don't make 100K a year. I rent out 4 of the rooms and live in the master. Total rent collected is $2200 ($550) each room. My mortgage + prop tax + insurance = $1610/month. I essentially don't pay the mortgage and pocket the nearly $600 towards the eventual taxes I will pay. (I love the first of every month. Oh hey, aug 1st is coming).

My house was built in 05 and greatly reduces the chances of a furnace blowing on or needing a new roof anytime soon. Some think it's hard to find tenants, and it's different for every city, but there is a huge tenant market right now. A lot of people think like media artist and save to have 20% down. That's great! In the meantime they have to live somewhere - renting.

Other friends said the housing market will continue to plummet and my house will lose value and have negative value. If you create my housing set up; who cares?! I want the market to crash more; I can buy another house like mine for less and keep the rent the same. If someone said my house was worth $150K now instead of the 230k I purchased it for in Oct 11' I wouldn't care. It will appreciate eventually and my mortgage is paid for and then some (in the mean time). My roommates are great. I filled my house to capacity by Jan 12 and have been. Collecting the profits every 1st of the month. It's like having a mortgage free newer $3000 sq ft house & the profits pay the car note, so a free 07 335i.

This doesn't work for those w/ a wife and kids.

Food for thought.
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      07-28-2012, 01:04 PM   #146
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Its easier for guys in the states to buy a house.. So much cheaper than here in Vancouver... I've been condo shopping recently and it pains me to part with so much money for what I'd be getting here.. I was looking at a 1600 sqft condo and it was selling for 970k before taxes.. Other option was to buy two small condos and connect them together but it still comes up to almost a mil after tax..

I can get a $3 million mansion in the states compared to a three bed room house in a good neighborhood here..

I am sure there are cheaper places, you're just picking the main metro. Try manhattan same thing. Move an hr any direction and its 80% cheaper.

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To OP:

You mention being single w/ no dependents. I'm in the same boat. I purchased a $232K house using FHA. Put 3.5% down. Had 11K saved up after closing. Spent about 6K of that buying appliances (house was bank owned and old owners removed stove, microwave, 6 ceiling fans, refrigerator, and dishwasher).

My house is 3000 sq ft and 5 bedrooms. I don't make 100K a year. I rent out 4 of the rooms and live in the master. Total rent collected is $2200 ($550) each room. My mortgage + prop tax + insurance = $1610/month. I essentially don't pay the mortgage and pocket the nearly $600 towards the eventual taxes I will pay. (I love the first of every month. Oh hey, aug 1st is coming).

My house was built in 05 and greatly reduces the chances of a furnace blowing on or needing a new roof anytime soon. Some think it's hard to find tenants, and it's different for every city, but there is a huge tenant market right now. A lot of people think like media artist and save to have 20% down. That's great! In the meantime they have to live somewhere - renting.

Other friends said the housing market will continue to plummet and my house will lose value and have negative value. If you create my housing set up; who cares?! I want the market to crash more; I can buy another house like mine for less and keep the rent the same. If someone said my house was worth $150K now instead of the 230k I purchased it for in Oct 11' I wouldn't care. It will appreciate eventually and my mortgage is paid for and then some (in the mean time). My roommates are great. I filled my house to capacity by Jan 12 and have been. Collecting the profits every 1st of the month. It's like having a mortgage free newer $3000 sq ft house & the profits pay the car note, so a free 07 335i.

This doesn't work for those w/ a wife and kids.

Food for thought.

I applaud anyone who can live like this, 99% of people will not want to rent out and live with 4 people. I can't even imagine living with 1 roommate let alone 4, but kudos at least you are not burning money renting. Theres a lot of laws against stuff like that here and neighbors are quick to shout.

Alternative to this is buying a hi ranch or MF house at least it is separate kitchens/etc.
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      07-28-2012, 03:07 PM   #147
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I am sure there are cheaper places, you're just picking the main metro. Try manhattan same thing. Move an hr any direction and its 80% cheaper.




I applaud anyone who can live like this, 99% of people will not want to rent out and live with 4 people. I can't even imagine living with 1 roommate let alone 4, but kudos at least you are not burning money renting. Theres a lot of laws against stuff like that here and neighbors are quick to shout.

Alternative to this is buying a hi ranch or MF house at least it is separate kitchens/etc.
It only works if certain parameters are met. The house HAD to be 3000 sqft minimum and 5 bedrooms. 3 bathrooms (2 upstairs) and one full bath downstairs. Kitchen is very open and expansive. There were points in time where I thought the whole idea would fall apart.

Responding to potential tenants telling them that there are 4 people already living in the house was disheartening, but when they toured the house and saw the layout, they understood how it would work. Its very easy to maintain a 3000 sq ft house when you have 5 people working to do so.

I really love my roommates (I am 26 and they are all mid 40s plus except for one). All have steady incomes and are coming out of divorces or foreclosure. There credit is shot, but they have a decent income... enough to pay $550 a month + utilities. We all get along every well and I always bring home a 6 pack of some new beer nobody has tried. We are starting to have poker nights once a month.

Again, this can only work if the layout of the house is right and the people. I had a lot of people tour the house, but I didn't feel the right vibe and kept up the search for the right fit.
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      07-31-2012, 05:46 AM   #148
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OK, I am 26, and just got a new job promotion. Looking to buy my first house in the next 6-12 months

I have already lived in apartments, etc, but alays rented.

Questions:

What are the steps I need to take in buying a house?

What are some "inside tips" or information to know of?

How should I go about picking a real estate agent? (There has to be some agents on here that can chime in!)

How do I go about knowing what I can afford?

How do I go about estimating monthly bills, etc.




Any other info would be helpful. This is the start of a new life
I work in the financial services industry (currently a VP of Operations/Regulatory Compliance for a major American bank), but I've done everything from Personal Banker to Underwriting in college. Here's some tips:

Get pre-qualified. Have a Loan Officer review your income, your credit, and your downpayment. This will tell you what you can be approved for and how much you can afford.

Insider tips: If you plan to stay in the home for awhile, pay the points (if your lender offers it) to get the lowest rate. It'll pay for itself if you're going to be in the home for awhile.

You can shop around, but honestly, rates are pretty comparable across the board. 30 years for best credit profile are around 3.3-3.5%. Look at where you currently bank - they may have promotions for existing customers - in addition, most banks give extra perks when you hold a mortgage with them.

15 year mortgages and their rates seem attractive, but I always suggest to go with a 30 year and if you wish to turn it into a 15 year by paying extra to principle, you definitely can. Then, in the event of financial issues, you have a default lower payment to manage, vs. a higher default payment.

Research the neighborhood. Look at crime report websites, etc. Drive around here and there day and night. It'll give you a feel for the area.

In terms of what can be afforded... a lot of people think just Principle and Interest, when lenders also factor in Taxes and Insurance (PI vs. PITI). So that'll come into play with DTI calculations.

Generally, lenders (for a conventional, conforming mortgage) prefer you to spend no more than 33-36% of your gross income on PITI, and no more than 45% or so on total debts. FHA mortgages can go up to 45% for PITI, and 55% for total debts - but, these metrics also depend on the originating bank.

Hope this helps with some insight. If you have more questions, feel free to ask. Aside from it being in my career field, I just purchased a home earlier this year, so I know it both from a lender's perspective and a homebuyer's perspective.
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      11-09-2012, 11:00 AM   #149
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[quote=48Laws;12349365]No it's not. This is also recommended by many industry experts. The delinquency regarding FHA loans isn't as cut and dry as you make it. Again, PMI is to offset the lack of equity in a new home which is something lenders want to safeguard. I recommend 3-15% down and the rest for emergency funds. Why throw all your money into a liability anyway? Bad advice. Lol/QUOTE]

...And less than 5 months later...

Quote:
FHA Said to Set Stage for Treasury Draw as Losses Mount

The Federal Housing Administration, faced with continuing losses from the housing bubble, will issue a financial analysis next week setting the stage for what could be its first draw from the U.S. Treasury in its 78-year history, according to three people briefed on the report.

http://www.bloomberg.com/news/2012-1...ses-mount.html
Just as a I predicted. We're all on the hook for it. 48Laws simply gives horrible advice.
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      11-09-2012, 11:01 AM   #150
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No it's not. This is also recommended by many industry experts. The delinquency regarding FHA loans isn't as cut and dry as you make it. Again, PMI is to offset the lack of equity in a new home which is something lenders want to safeguard. I recommend 3-15% down and the rest for emergency funds. Why throw all your money into a liability anyway? Bad advice. Lol
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Why avoid FHA? 3.5% down even with MI, can be a great thing. I know people like to eliminate pmi, but especially if you can put the 20% that you would have used into a better investment or just have more cash on hand.
...And less than 5 months later...

Quote:
FHA Said to Set Stage for Treasury Draw as Losses Mount

The Federal Housing Administration, faced with continuing losses from the housing bubble, will issue a financial analysis next week setting the stage for what could be its first draw from the U.S. Treasury in its 78-year history, according to three people briefed on the report.

http://www.bloomberg.com/news/2012-1...ses-mount.html
Just as a I predicted. We're all on the hook for it. 48Laws simply gives horrible advice. FHA is a failed institution.
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      11-09-2012, 11:12 AM   #151
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I guess we know why he didn't take the bet.

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In fact, I know you can't answer it, so let's try something you will understand. Why don't we have a gentleman's bet to settle this issue? Let's say a small amount of $1,000. I'll bet you that FHA delinquency will rise in the next 3 months, because low down payment financing, and a system based on it, simply doesn't work. So by October 18th, 2012 (or so), I will bet you $1,000 that FHA delinquency will rise, rather than go lower. If what you're saying is true, that low down payments work, you should take my $1,000 without much effort. If however delinquency does rise (anything above a 0% increase), then you owe me $1,000. We can have a moderator hold the checks, or do donations to our favorite non-profit.

Are you game?
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Originally Posted by 48laws
$1000? What a character. Is that how you play a big wig online? You're really feeling yourself. Like seriously. As I said, predatory lending and shady underwriting during the boom of FHA loans is the chief cause of defaults. During this period, this loan type was most attractive to buyers and saturated the lending market, hence the reason for what we see today.
No, the chief reason why FHA needs a bailout is because 3.5% down is statistically proving untenable and inherently flawed as a mortgage product. Now we all get to pay for it.
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      11-09-2012, 02:58 PM   #152
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No, the chief reason why FHA needs a bailout is because 3.5% down is statistically proving untenable and inherently flawed as a mortgage product. Now we all get to pay for it.
I'm not familiar with how FHA loans at all, for forgive my ignorance... but doesn't one have to pay a pretty penny every month as "insurance" ? Money that doesn't actually go towards the equity of the house, but is a buffer due to the low downpayment?
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      11-09-2012, 05:11 PM   #153
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Originally Posted by persian54 View Post
I'm not familiar with how FHA loans at all, for forgive my ignorance... but doesn't one have to pay a pretty penny every month as "insurance" ? Money that doesn't actually go towards the equity of the house, but is a buffer due to the low downpayment?
What you are referring to is PMI (Private Mortgage Insurance) and would typically be included on any home loan that doesn't have 20% as a down payment.
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      11-09-2012, 05:21 PM   #154
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I'm not familiar with how FHA loans at all, for forgive my ignorance... but doesn't one have to pay a pretty penny every month as "insurance" ? Money that doesn't actually go towards the equity of the house, but is a buffer due to the low downpayment?
Yes, FHA has an upfront fee (a percentage of the overall loan), and a monthly insurance fee until you reach 20% I believe.

It's supposed to be a buffer as it supposedly adds to FHA reserves in case of default. That reserve in July when 48laws gave his horrible advice was around 1% (of total liabilities). Now it's even less than that, and FHA is going to need a public, tax payer, subsidized bailout.

Of course I predicted this in July 2012, and guys like 48laws were quick to point out that the mortgage insurance would save FHA as a "buffer", as you can see, he was horribly wrong.

But I guess we all have to pay for it since guys like 48laws who thought 3.5% down was a smart mortgage decision are now dumping their bad financial decision on all of us. Go USA!
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