[JMX328]

The FHA program, while having the best intentions, is unfortunately heavily taken advantage of by people who cannot seemly understand how to manage their financial obligations.

In my opinion... everyone should have 20%+ to put down on a home. With that level of investment, it makes it much, much harder to just up and walk away from it.

[MediaArtist]

Originally Posted by JMX328

The FHA program, while having the best intentions, is unfortunately heavily taken advantage of by people who cannot seemly understand how to manage their financial obligations.

In my opinion... everyone should have 20%+ to put down on a home. With that level of investment, it makes it much, much harder to just up and walk away from it.

Plus people who can actually save 20% of the price of a home obviously have sense of how to manage their finances.

Right now the average down payment amount is 9%, and the amount of jumbo loans as a percentage of all loans is back to 2007 levels. With the FHA bailout on top, tax increases, and austerity now a way of life, the housing market is going to take an ass kicking.

[carogers86]

I think I manage my finances pretty well, but I didn't have 20% down. Didn't want to waste more time than I had to saving. I could buy a house in a responsible manner and waste less time saving up.

I remember media artist making a point that investors don't use FHA.

I bought my house FHA as an investor. I didn't buy this house to have empty guest rooms and host tea parties - I did it for the cash flow that I knew was possible for only 3.5% down + closing costs. I'm not a rocket scientist. My ex gf did the same. We both rent out rooms that subsidize the mortgage (or in my case cover the mortgage + ~$550 in bonus cash every 1st of month).

My current gf has ex classmates who were given cash from parents in amounts that could purchase nice houses for 20% down. Instead they buy used 7 series bimmers or brand new 335is - no jobs. Having 20% down to put down on a house isn't a measure of financial responsibility..

I think there are exceptions on both sides of the argument.

In short: listen to media artist and save for 20% down on a house. In the mean time, I will let you savers know when I have a vacancy in one of my rooms in one of my houses.

[MediaArtist]

Some people don't have the option to fill every room in their house with a tenant, or want to put up with having to live with their tenants (if it's their first home).

I actually do think places like Stockton, Sacramento, Las Vegas, and Atlanta have had prices come down far enough that they have hit rental parity even with less than 20% down. That doesn't mean there isn't some downside risk to losing what little equity someone might have with only 3.5% down, but if the property is at rental parity, then I guess it softens the blow somewhat.

Also add to the fact that none of those locations are prime locations for RE, and it shows in their prices as well. West LA, South OC, and Santa Clara County are for the most part far, far away from Sacramento price wise.

[josephr25]

Originally Posted by carogers86

I think I manage my finances pretty well, but I didn't have 20% down. Didn't want to waste more time than I had to saving. I could buy a house in a responsible manner and waste less time saving up.

I remember media artist making a point that investors don't use FHA.

I bought my house FHA as an investor. I didn't buy this house to have empty guest rooms and host tea parties - I did it for the cash flow that I knew was possible for only 3.5% down + closing costs. I'm not a rocket scientist. My ex gf did the same. We both rent out rooms that subsidize the mortgage (or in my case cover the mortgage + ~$550 in bonus cash every 1st of month).

My current gf has ex classmates who were given cash from parents in amounts that could purchase nice houses for 20% down. Instead they buy used 7 series bimmers or brand new 335is - no jobs. Having 20% down to put down on a house isn't a measure of financial responsibility..

I think there are exceptions on both sides of the argument.

In short: listen to media artist and save for 20% down on a house. In the mean time, I will let you savers know when I have a vacancy in one of my rooms in one of my houses.

Well, being given cash is different from actually saving cash yourself. Regardless, it reminds me of a story about how a 40-year-old couple would live at home and brag about owning a brand new BMW

[carogers86]

MediaArtist does his homework! He is very correct on housing market in Sacramento. In fact, I live in a little city just south called Elk Grove. You will drool over what a $350k house looks like. Being a first time home buyer, I was shocked when I had to insure my house for $450K. I told the insurance company that I only bought it for $235k. They said the materials cost to rebuild my house to spec if it burned to the ground was $450k! That shows its possible to buy a house for less than it costs to build the thing!

Nuckin Futz!

So many Bay Area investors know a rental model like this only works in places like Sacramento. When looking at properties, I would put an offer down only to be beaten out by some Oakland resident who was walking around with $250k in their checkings and offered cash.

I feel FHA "levels" the field for a guy like me (26 and haven't had as long of a time to save up to compete against older more established, dual income individuals). Doesn't mean the program isn't immune to lemmings of the kind MediaArtist detests.

You can start by shoring up your credit. Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

[Foxrus14]

By reading most of your posts in this thread I would say you are California Jaded. California is a beautiful place... but it is broke. I I would put my house in California it would be a $10-$20 million home. Every thing about california and its life and realestate is broke. Not to mention taxes and infrastructure.

NOW is a great time to buy. I live in Charlotte, fastest growing city in the country for the last few years... Second largest financial hub in the country (NYC #1). We bought a house in April last year and just had it appraised last friday... We put zero money down luckily we got a 1.9% mortgage rate. We now have 54% equity in the home with out putting money down. It is all about location and the metropolis you are closest to. Plus it helps that we live on one of the top 20 private country clubs in the USA. But once again location location location. The only realestate you can compare most of california to is Detroit. Where if you buy a house and want to get rid of it in a few years, you are going to lose your ass. But California is really Pretty...

Originally Posted by MediaArtist

Some people don't have the option to fill every room in their house with a tenant, or want to put up with having to live with their tenants (if it's their first home).

I actually do think places like Stockton, Sacramento, Las Vegas, and Atlanta have had prices come down far enough that they have hit rental parity even with less than 20% down. That doesn't mean there isn't some downside risk to losing what little equity someone might have with only 3.5% down, but if the property is at rental parity, then I guess it softens the blow somewhat.

Also add to the fact that none of those locations are prime locations for RE, and it shows in their prices as well. West LA, South OC, and Santa Clara County are for the most part far, far away from Sacramento price wise.

[MediaArtist]

California is great if you can afford it. The problem is far too many people try to live above their means just to stay here.

For the most part though, my sentiment about CA Real Estate has changed slightly. Compared to rising rents, and the typical payment for a house with 20% down, there are many places hitting rental parity.

People say CA is leaking jobs, and the economy is slowing down here, but I don't see such a drastic slow down (yet).

[MisterSkiMask]

Originally Posted by MediaArtist

California is great if you can afford it. The problem is far too many people try to live above their means just to stay here.

For the most part though, my sentiment about CA Real Estate has changed slightly. Compared to rising rents, and the typical payment for a house with 20% down, there are many places hitting rental parity.

People say CA is leaking jobs, and the economy is slowing down here, but I don't see such a drastic slow down (yet).

Developers are build apartments like mad in the Bay Area. They are beginning to build higher density single family (read town homes and homes with close to zero lot) homes again.

Rents are up and there are a whole bunch of first time or second time 'first time' home buyers out there.

[carogers86]

Rents are rising because the economy is recovering; in my opinion. Those that lost nearly everything in 08/09 are finding jobs. Those jobs allow them to move out of their parents/friends houses. This increases demand for rentals (because they don't have enough saved for a 20% down payment and/or their credit is shot from foreclosure).

Will be a landlords market for some time. Wahoo.

[MediaArtist]

And, it's over.

http://www.zerohedge.com/news/2013-0...asury-bail-out

FHA has officially gone insolvent and failed. Just announced yesterday that FHA needs a bailout for the first time in its nearly 80 year history. The institution now needs $1.7 billion dollars just to stay afloat just as I predicted back in 2011.

48 laws should never ever give advice to anyone on mortgages for the rest of his life.

Originally Posted by 48Laws

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

[JasonCSU]

Originally Posted by MediaArtist

And, it's over.

http://www.zerohedge.com/news/2013-0...asury-bail-out

FHA has officially gone insolvent and failed. Just announced yesterday that FHA needs a bailout for the first time in its nearly 80 year history. The institution now needs $1.7 billion dollars just to stay afloat just as I predicted back in 2011.

48 laws should never ever give advice to anyone on mortgages for the rest of his life.

This is interesting and a little confusing. The posting states that the bailout is to cover projected loses due to a reverse mortgage program for seniors, not because of small down payment percentages and people defaulting on their loans. First off, why does a reverse mortgage program even exist? Second, isn't the whole point of a reverse mortgage for the FHA or bank to become the owner of a property once the senior receiving the reverse mortgage moves out or passes on? Have the banks been over paying on the reverse mortgages for more than these properties are worth, and have they not taken ownership of any of them yet? In theory, banks should be making money in the long term with reverse mortgages.

[MediaArtist]

Originally Posted by JasonCSU

This is interesting and a little confusing. The posting states that the bailout is to cover projected loses due to a reverse mortgage program for seniors, not because of small down payment percentages and people defaulting on their loans. First off, why does a reverse mortgage program even exist? Second, isn't the whole point of a reverse mortgage for the FHA or bank to become the owner of a property once the senior receiving the reverse mortgage moves out or passes on? Have the banks been over paying on the reverse mortgages for more than these properties are worth, and have they not taken ownership of any of them yet? In theory, banks should be making money in the long term with reverse mortgages.

Yes, reverse mortgages should always be profitable, they have been for decades in Asia, and Europe, but not the U.S? It doesn't make sense from a logical standpoint, unless of course it's a lie and that's not the reason why FHA is failing.

That's simply the FHA's "feel sorry for us" reason for it's failure so the treasury will give them the $2 billion dollars in bailout money. "We're trying to help senior citizens!" is a lot more palatable than "We gave money to people with sub-600 FICO scores, becoming the NEW sub-prime, and f*cked ourselves. Now we need tax payer money."

The FHA had delinquency rate increases of 10%, 27%, in 2010, 2011, respectively. Anyone who didn't see this coming literally had blinders on. They knew they were properly f*cked at the end of last year because they suddenly shot fees up all across the board for consumers looking for an FHA backed loan:
http://www.businessweek.com/news/201...h-2012-deficit

They also KNEW they had a nearly $20 billion dollar shortfall last year and would have no chance to cover their losses.

But as I predicted, FHA is going to hurt all of us in the end, because guys like 48Laws, and other FHA opportunist thought 3.5% down on anything is a great idea.

[MMMCOOKIES55]

Originally Posted by MediaArtist

Not a good market to be buying IMO, even with low rates.

+1. Rates are going up right now too. We got a pre-approval in June @ 3.15% 30 yr. fixed. We just locked in 30 days ago at 4.625% .

[MediaArtist]

Originally Posted by MMMCOOKIES335...

+1. Rates are going up right now too. We got a pre-approval in June @ 3.15% 30 yr. fixed. We just locked in 30 days ago at 4.625% .

If you can beat rental rates, it's a good time. Rents are rising too, but in many areas of SoCal at least the rent/buy ratio is way off.

[sarabrown]

The Consumer Financial Protection Bureau has prepared a study for Congress over the state of reverse mortgages in the nation. The Consumer Financial Protection Bureau is worried about reverse mortgages having a damaging effect on seniors who borrow them against the equity in their homes during retirement.