Would you buy a house with an FHA?

[coffeefreak]

DH and I sold our home in 2008 because we were going to move. He had exhausted all his job prospects here (or so we thought) and had offers in another state. He was offered a job here the day we sold our house and we took the job, but decided to go ahead with the sale of our home. We made no money (our fault, had refied 11 months before), and now, after renting for 3 years, we're feeling the itch. If we wait 3 years, we can MAYBE come up with a down payment for a conversion, but only because he's doing some contract work on the side. The contract is from June to June so, if we go with an FHA, we can buy this year by banking the money we make as a down payment. I HATE FHAs. I hate the PMI, I hate the hoops, I hate that they sell your loan to the highest bidder, but I don't know that we should really wait any longer. It's getting harder, not easier to buy, interest rates are rock bottom, and I'm sick of living in an apartment. Is it worth it?

 

Please feel free to share all horror stories here. We need to hear them:D

 

TIA!

Dorinda

Edited May 9, 2011 by coffeefreak
clear up job situation :)

[Audrey]

My opinion: Keep renting. Bank your savings and build 1) an emergency living fund in case you have unemployment, and 2) a retirement fund.

[Starr]

Some people say with the craziness of job markets none of us should own homes???

[coffeefreak]

My opinion: Keep renting. Bank your savings and build 1) an emergency living fund in case you have unemployment, and 2) a retirement fund.

 

So, would you move into a house and rent to do that? Not buy a house ever until retirement? Because that's another option I suppose. Find a good landlord, one that has a long history of good renting, and rent a home. I have friends that are doing that (several in fact) and their landlords are wonderful. They can make their house their own, and the rent is reasonable.

[coffeefreak]

Some people say with the craziness of job markets none of us should own homes???

 

I guess I don't agree. You could live your whole life like that. You never know what tomorrow will bring. I don't think mortgages are the problem, I think people living beyond their means is the problem. If you have an emergency fund, and little to no other debt, I think it's a good risk. Renting draws the same risks. However, to be honest, we are in a GREAT apartment, GREAT landlords, low rent. It's why we moved here and left the house we were renting. We cut our expenses by $400 moving into an apartment and we would gain that back by purchasing a home. It was hard to find an apartment too. So many people cannot get a mortgage or cannot afford their houses, they're moving into apartments. It's a crazy time.

 

Blessings!

Dorinda

[OrganicAnn]

I would say save until you have 20% for a down payment (and actually a more for an emergency fund).

 

It isn't just FHA where they sell the loans, paperwork and PMI. All loans with less than 20% down usually have PMI.

[coffeefreak]

I would say save until you have 20% for a down payment (and actually a more for an emergency fund).

 

It isn't just FHA where they sell the loans, paperwork and PMI. All loans with less than 20% down usually have PMI.

 

You're right, but a conversion loan (less than 20% down) has an end date to the PMI. FHA you are required to pay PMI for the life of the loan.:glare: I didn't realize other places sell loans too. We had a conversion loan and it was WONDERFUL! We held our own escrow, they never tinkered with the loan, it was beautiful. *SIGH*

 

And I agree with you about the emergency fund. That's figured into our savings before buying the house. Guess I should have said that.:001_smile:

[tammyw]

Interest rates are rock bottom right now, but when they start going up, it's going to be even harder for people to buy (loans are already super hard to get), and house prices should fall more. Also, if they take away the mortgage-tax-benefit, that will negatively affect things also. I'd save more money, and wait, unless you plan to stay in the house for at least ten years, and you can truly afford it, without any chance of needing to sell anytime soon.

[foxbridgeacademy]

IMO: Continue to rent until your DH has a firm job lined up, temporary contract work is just that, temporary. Also FHA or not you will have PMI unless you can put 20% down. I would do what the PP suggested, find a good rental, where you can save money, but still feel like home. Since you're free of a loan, continue to keep your eyes open for better jobs in other cities/states.

[coffeefreak]

I guess I need to clear something up. We DO have a firm first job. He has been with them for 3 years, and they pay him excellently. However, he is working a SECOND job for the next year. I got ahead of myself in my original post. We have a savings account, and we know PMI exists if you put less than 20% down.

 

Thanks for all the suggestions though :)

[lmkzbcb]

Mortgages are going to change as well. Coming soon to a neighborhood near you.....no more 30 yr fixed loans. This is speculated to change in the next 2 years. They already do this is Europe. You can not get a fixed loan, they are adjustable every few years. I read this on Yahoo Financial News.

If dh likes who he is working for and you like living in the town you are in, I say find a forever home and buy while rates are low and you can get a 30 yr fixed. But plan on staying in it for the long haul, so take your time in picking it out. (If something drastic happens, rent the house out. Rentals are hot right now and will continue to be for awhile).

True that they may not change the laws, but from what I understand banks are going to have to do something like it.

I am more along the lines of a bird in hand is better than 2 in the bush. I would not get an FHA, I would beg and borrow from family or on cars or even just my name to get that 20% down. At worst case, do the conversion.

[Rosy]

We've done FHA loans twice. Yes, the PMI sucks but we have felt that it is better than continuing to rent. We've never been in a situation where we could save up 20% for a down payment--renting doesn't cost much less than owning a modest home (around here, anyway). Even if we were able to save $400/mo., it would take over 10 years to get $50,000. By that time we could have made much more in equity than we would have saved on PMI.

 

I say go for the FHA loan, and make sure you're buying a house that is well within your means, even if it means upgrading in 5 years or so.

[coffeefreak]

I found this info on Dave Ramsey's website.

 

http://www.churchillmortgage.com/homebuyers/fha-va.aspx

 

It's the first comparison chart I've found that explains the changes to FHA PMI. YIKES! PMI has skyrocketed!

[Storm Bay]

DH and I sold our home in 2008 because we were going to move. He had exhausted all his job prospects here (or so we thought) and had offers in another state. He was offered a job here the day we sold our house and we took the job, but decided to go ahead with the sale of our home. We made no money (our fault, had refied 11 months before), and now, after renting for 3 years, we're feeling the itch. If we wait 3 years, we can MAYBE come up with a down payment for a conversion, but only because he's doing some contract work on the side. The contract is from June to June so, if we go with an FHA, we can buy this year by banking the money we make as a down payment. I HATE FHAs. I hate the PMI, I hate the hoops, I hate that they sell your loan to the highest bidder, but I don't know that we should really wait any longer. It's getting harder, not easier to buy, interest rates are rock bottom, and I'm sick of living in an apartment. Is it worth it?

 

Please feel free to share all horror stories here. We need to hear them:D

 

TIA!

Dorinda

 

Mortgages are going to change as well. Coming soon to a neighborhood near you.....no more 30 yr fixed loans. This is speculated to change in the next 2 years. They already do this is Europe. You can not get a fixed loan, they are adjustable every few years. I read this on Yahoo Financial News..

 

We pay PMI and have a loan through the state because dh had had it with renting and was very unhappy. I hate, hate, hate having a mortgage and paying PMI (we paid only $1000 down payment had have a small silent second loan we will hav to pay back because we'll be paying off early.)

 

I was going to say save and wait, but if it's true that fixed mortgage rates are going to go, then that might not be what you want to do. One advantage of a fixed rate mortgage is that you can pay extra on your principal at any time with no penalty. We haven't been able to pay as much extra as we've liked, but we've already saved over $20,000 in interest (a lot more than the silent second loan we'll now have to pay back.) The hard part is that we have to pay PMI until we pay off 20 percent and that takes a long time. This is one of the reasons I'm letting my middle one go to ps next year (on trial); I want to teach more piano and it will be much easier to do with one at home (no one to fight with during my teaching time; they often get along, but when they fight it's disruptive and I have to step in) so that we can pay more off on our principal.

 

It's a tough call, but bear in mind that if you get a 30 year mortgage and pay it on schedule, you may pay double the cost of your house by the time you pay the interest. At the start of our loan, the interest was going to be more than the loan itself, but now it's less. Still too much. The more you can pay extra on your loan at the beginning, the better. At first we were saving 4 times as much interest as the amount extra we paid, but now it's closer to 3 times (after 4 years.) If you can get a mortgage, PMI and escrow payment that is the same as the rent you pay now (or close to it), you could take the money you were going to put aside for a downpayment and put it to your principal.

 

I still remember the scary scenarios that were happening in Vancouver in the first half of the 1980s when the interest rates jumped enormously because the loans were all variable rate. I'm not sure if Canada has fixed rate morgages or not because this is the first house we've ever owned. Dh, however, is much happier and that makes a huge difference for us.

[Scarlett]

I don't think mortgages are the problem, I think people living beyond their means is the problem. If you have an emergency fund, and little to no other debt, I think it's a good risk.

 

QFT

[coffeefreak]

QFT

 

:confused: I don't know that acronym.:lol:

[KristinaBreece]

:confused: I don't know that acronym.:lol:

 

Quoted for truth, I believe. :001_smile:

[MindyD]

I voted other. We just sold our house in March, and we both agree we will NOT buy another house until we know as much as we can that we want to settle forever. It's just not worth it. Yes, with buying you build up equity, but houses take a lot of time and money to upkeep. We didn't realize how much it took until we started renting. It's much less stressful for us to rent an apartment. I guess for us, it's worth the trade off to pay rent and keep our time instead of owning a home, but spending all our free time cutting the grass, fixing the _____ (something always breaks, right?). I had to really change my mindset on renting. We were all set to rent for 6 months until we knew where we wanted to buy (we relocated to a new city), but we realized that it would be smarter financially to wait until we can put at least 20% down and get a 15 yr fixed (as Dave Ramsey recommends). It's going to be a long time before we can do that, and we don't even plan on staying here forever. We know we'll be here at least 3 years, but who knows after that.

I understand what the other person was saying about the job market, but I understood it to mean that people relocate for jobs so often that buying a house isn't a long-term investment for people like it once was. Sooo, all this to say that unless you know as best as you can that you're where you want to be, AND you have 20% down AND you can comfortably afford to buy without cutting the rest of your budget to bare bones, I'd just rent and enjoy the amenities it provides. If something breaks, call maintenance! Our apartment community has a pool, fitness center, grills, and a billiards room. We're choosing to embrace life as renters, and it's not as bad as I thought it would be.

[abacus2]

Other: I might, but from your post I think it sounds like it would be a bad idea for you. It sounds like you are so frustrated that you are considering doing something you would not normally consider. That seems to be a recipe for regret.

[tammyw]

I also see a lot of articles like this online, almost on a daily basis. That's why it's important to know you want to stay in a house you buy long-term.

 

http://finance.yahoo.com/banking-budgeting/article/112698/housing-crash-getting-worse-marketwatch?mod=bb-budgeting

[Crimson Wife]

My opinion: Keep renting. Bank your savings and build 1) an emergency living fund in case you have unemployment, and 2) a retirement fund.

 

:iagree:

If you don't have at least 6 months' worth of living expenses (and preferably 12 months') don't make any major purchases until you've got that.

 

Apartment living stinks (BTDT) but in this economy, better safe than sorry. Even the most secure-appearing job could turn out not to be. :glare:

[coffeefreak]

We talked with someone today who took our info at Churchill Mortgage (Dave Ramsey's recommendation). It sounds like we might be able to do a Conventional after all. We'll wait and see what they say!

[ChristineW]

I hope that you do qualify for a conventional loan. We almost bought our current home with an FHA loan but the interest rate difference between the FHA and the 30 year fixed was pretty big (nearly half a percent). We only had enough for 15% down, but there are strategies to buyout the mortgage insurance.

 

Sellers don't like FHA either--we lost a bid on a house b/c we were going to have to rely on the FHA to buy the house (it was more expensive than the one we bought in January).

 

I would definitely choose FHA over a convertible loan. Rates are too low; they will rise.

 

Christine

[mommymilkies]

I guess I don't agree. You could live your whole life like that. You never know what tomorrow will bring. I don't think mortgages are the problem, I think people living beyond their means is the problem. If you have an emergency fund, and little to no other debt, I think it's a good risk. Renting draws the same risks.

 

:iagree: We had a lot more problems renting than owning. I don't like people walking into my house whenever they please, first of all. And I like being able to paint my walls, plant some flowers, and having security.

 

I have a FHA loan. It's great. Zero problems here. :)

[lmkzbcb]

I also see a lot of articles like this online, almost on a daily basis. That's why it's important to know you want to stay in a house you buy long-term.

 

http://finance.yahoo.com/banking-budgeting/article/112698/housing-crash-getting-worse-marketwatch?mod=bb-budgeting

 

That same article is under a different title and I read it today. Very Interesting!

 

@OP this article is worth your time to read.

[ktgrok]

My home is financed with an FHA loan and yes, there were some stupid hoops to jump through (had to buy a stove because it didn't come with one), but it isn't anywhere near as difficult as it was 10 years ago when i bought my last home. We've had no problems at all. And as some one else said conventional loans can be sold too, so that really isn't an issue.

 

I say go for it!