http://money.cnn.com/2017/01/20/real_estate/trump-suspends-fha-premium-rate-cut/
Thanks Trump. This negatively affects me. Whom does it help?
the people that pay for your default.
It indirectly negatively affects me because I'm buying (with a conventional mortgage) in an area that is largely being built in/restored by first time homebuyers that take advantage of FHA loans. Sorry for the confusion from my first post.
However, assuming I were taking an FHA loan, the "people" that would be paying for "[my] default" would be 'me.' The FHA is self-funded by the very fee Trump is effectively raising. The FHA currently has plenty of reserves and doesn't need to remain at the higher rate. It doesn't take any federal money (although it is backed by the US treasury); it uses the fees from its mortgages to pay for the defaults. It's like a big government run mortgage insurance company.
The existence of FHA mortgages helps nearly every segment of our economy and its benefits drastically outweigh its drawbacks. So once again, whom does it [the suspension of the rate cut] help?
Quoteif you can buy a house with a 3% down payment (which is already absurd) but can't afford one at 3.25% you should not be buying a house. If it's not brand new, expenses will abound.
It has been awhile since I bought a home, but I don't remember conventional down payments being that low, the last time I did. They certainly were not when I bought my first home. I wouldn't have been able to buy it without FHA being an option.
If you don't want to pay it put down 20% or more. If you have a down payment less than 20%, FHA or otherwise, you are going to have to pay for it.
Same here, without FHA we would've been throwing $1500 a month at least at rent, as we needed 4 bedrooms. There's probably some truth to if you can't afford put down more, maybe you shouldn't buy a house, as our central air unit went out 8 months after moving in and the roof is coming up for repairs soon, but with appreciation and the small amount going towards principle, we're finally in the black.
The FHA insurance premium is a bit steep, it tacks on 200 a month to our mortgage payment. Can't wait to get to 80% LTV and refinance it as a conventional, that is, if the rates aren't too high.
Maybe this will be the first step towards killing urban sprawl. It is a long time coming that people choosing to live at low density started paying the cost of doing so.
http://www.strongtowns.org/journal/2017/1/9/the-real-reason-your-city-has-no-money
QuoteThe FHA insurance premium is a bit steep, it tacks on 200 a month to our mortgage payment. Can't wait to get to 80% LTV and refinance it as a conventional, that is, if the rates aren't too high.
You may not have to go to that trouble. The rules change all the time, but if you are at 80% LTV, sometimes they drop the MPI as soon as you provide the documentation.
Quote from: fsquid on January 23, 2017, 12:42:00 PM
If you don't want to pay it put down 20% or more. If you have a down payment less than 20%, FHA or otherwise, you are going to have to pay for it.
This is not true anymore. You can get a conventional mortgage with as little as 5% down with many lenders.
Quote from: vicupstate on January 23, 2017, 02:41:13 PM
QuoteThe FHA insurance premium is a bit steep, it tacks on 200 a month to our mortgage payment. Can't wait to get to 80% LTV and refinance it as a conventional, that is, if the rates aren't too high.
You may not have to go to that trouble. The rules change all the time, but if you are at 80% LTV, sometimes they drop the MPI as soon as you provide the documentation.
The rules changed for FHA loans back in 2013. If you don't refinance to get out of an FHA mortgage, you're gonna be stuck paying those insurance premiums for a very long time; potentially the entire life of the FHA mortgage assuming you never refinance into a conventional mortgage.
http://themortgagereports.com/14691/fha-mip-mortgage-insurance-premiums-mortgage-rates
Quote from: vicupstate on January 23, 2017, 02:41:13 PM
QuoteThe FHA insurance premium is a bit steep, it tacks on 200 a month to our mortgage payment. Can't wait to get to 80% LTV and refinance it as a conventional, that is, if the rates aren't too high.
You may not have to go to that trouble. The rules change all the time, but if you are at 80% LTV, sometimes they drop the MPI as soon as you provide the documentation.
Agreed! Most people are refinancing out of their FHA loans after two years and moving into a lender paid PMI conventional loan. Will your rate increase? Yes but the math is your favor. For example, if you have a $200k 30 year mortgage at 4%, your principal and interest payment would be $955 plus your escrow payment plus your MIP ($200). However, if you have a $200k 30 year mortgage at 4.5% with lender paid PMI, your principal and interest payment would be $1,014 plus your escrow payment. A borrower could save $140 per month just by refinancing to a conventional option.
Quote from: bill on January 22, 2017, 11:06:25 PM
the people that pay for your default.
We pay taxes too, Bill. We are also the same people who are providing the federal assistance for Hurricane Matthew homeowners who didn't pay for the proper insurance or weren't covered by cheap insurance. My point is, take a step back. At some point everyone turns to the government for assistance. Those hit by the tornadoes yesterday will be asking for assistance from you and I as well.
I'm about to buy our first house with an FHA loan. Is it ideal? No. But I'm in my mid 30's and am ready to stop smelling the marijuana smoke from the apartment next to me. A home will provide me a better quality of life for my family.
This move by Trump to cancel the rate reduction was a pretty dick move considering the FHA fund has plenty of reserves. (It goes along with his core belief that everything President Obama did was bad.) The qualifications for FHA loans have also changed a great deal since 2006 so comparing the two decades isn't really fair.
Trump has lots of experience with mortgages, right?
I hate to tell you but get used to "lots of dick moves" by this guy.
His entire resume was built on "branding," he's not even a builder.
This should not come as a shock but Pres KGB spent every hour of his working life trying to enrich himself, not other people.
He's not an expert in foreign or domestic policy, unless some minutia of it put money in his pocket.
He advocated outsourcing through Trump U. (See below from Washington Post)
"Trump also encouraged outsourcing to students of Trump University, the now-defunct program that is under litigation over allegations of fraud. In a 2005 post titled "Outsourcing Creates Jobs in the Long Run," Trump wrote that sending work outside your company "is not always a terrible thing."
"I know that doesn't make it any easier for people whose jobs have been outsourced overseas, but if a company's only means of survival is by farming jobs outside its walls, then sometimes it's a necessary step. The other option might be to close its doors for good," Trump wrote in the post."
You can literally expect one f#ck up after another, and no recognition of the damage it will do.
Quote from: jlmann on January 24, 2017, 12:26:47 PM
As someone mentioned- there are many traditional lenders who don't require 20%, albeit more than FHA. Point is it's not FHA or 20% down.
No offense to anyone, but home ownership isn't a right and it shouldn't be a right for literally everyone with a 580 or better credit score and 3.5% down. Requiring a 5-10% down payment is a perfectly reasonable barrier to entry- it helps ensures home buyers understand the budgeting, patience and diligence to be a good property owner.
FHA allows you to put virtually nothing down given the huge liability of home ownership, and the income qualifications are absurd: so long as your total debt service is 43% or less of your GROSS income you qualify.
Let's say you have an effective tax rate of 20%- that means you have 37% of your income for EVERYTHING besides debt service.
I'm sure many responsible people use these programs, but the qualifications should make sure only financially responsible qualify. Not the current structure at all
I don't disagree with anything in your post, but my point in starting this thread was simply to point out that raising the rates won't help anyone. If there is statistical evidence that the current regulations should be changed regarding the approval of FHA loans, so be it, but raising the financial burden on those who are already in the most tenuous financial positions in the home mortgage system, if anything, makes them more likely to default, and yet doesn't change the prequalification conditions that some of the respondents in the thread complain of, but for a marginal increase in anticipated debt for debt to income calculations (which ironically only would affect new mortgage qualifications, not the outstanding mortgages).
Quote from: jlmann on January 24, 2017, 12:26:47 PM
As someone mentioned- there are many traditional lenders who don't require 20%, albeit more than FHA. Point is it's not FHA or 20% down.
No offense to anyone, but home ownership isn't a right and it shouldn't be a right for literally everyone with a 580 or better credit score and 3.5% down. Requiring a 5-10% down payment is a perfectly reasonable barrier to entry- it helps ensures home buyers understand the budgeting, patience and diligence to be a good property owner.
FHA allows you to put virtually nothing down given the huge liability of home ownership, and the income qualifications are absurd: so long as your total debt service is 43% or less of your GROSS income you qualify.
Let's say you have an effective tax rate of 20%- that means you have 37% of your income for EVERYTHING besides debt service.
I'm sure many responsible people use these programs, but the qualifications should make sure only financially responsible qualify. Not the current structure at all
It is hard for me to remember, it has been so long, but I seem to remember the total debt load was like 38%back in the 'late '80's and '90's before the bubbles of more recent times occurred. Given the higher than inflation increase in home values since then, 43% doesn't sound that drastic, if it was indeed 38% before.
Right out of college, my CAR payment (Chevy Nova) and insurance was 50% of my NET. I somehow managed without missing a payment.
BTW, it was government loans that turned a nation of renters into a nation of homeowners. Something to think out. I could easily seeing it going back the other way.
FHA should go away - it's unfairly influencing a market to the detriment of all, including those it maintains it's helping.
We used FHA and were ultimately forced to in order to buy a house after our first 4 attempts had failed through no fault of our own but were already $$$ committed to the out of state home buying process. I suspect if the government weren't involved with the process (including excessive regulation) we would have been living in the first house we were under contract with at a much lower rate via the conventional loan we were doing.
Quote from: jlmann on January 25, 2017, 12:17:14 PM
What private loan was available to you?
there were a bunch. when we started the process we went through a broker who had like 60+ products available and we limited that number down to the companies offering the best rates and terms. I think we were looking at 3.45-3.65% for 30yr fixed w/ 5%-20% down? up to $250,000 conventional - I'd have to look through the old paperwork to give actual rates we were locked into beginning of 2016 year