Buy vs. Rent NoVA

[boyd888]

Originally Posted by Jreyna

There is a lot of pros and cons to buying vs renting, and a lot of people make a good point here. But there are more loan options then just 20%. If you can qualify for an FHA loan, the min down payment is 3.5% of the loan.

FHA loans were a good deal during the 2008ish period with the home buying credit, but they are HORRENDOUS now. You now have to pay a 1.75% fee to just get the FHA loan and you have to pay PMI on a 3.5% down 30 year loan FOREVER (or until you refinance out of FHA).

If you have good credit you can easily get a 5% down conventional loan. You'll still pay PMI, but it's cheaper and eventually goes away. A 5% conventional vs a 5% FHA will be a good $25K in savings over the first five years on a $400K home - it's that big of a difference.

[NC211]

I went with FHA at the end of 2011 for the simple reason that it's the only debt product (other than VA) that is assumable. I like the idea that I can consider the 3.75% debt into the price of the house if I found myself having to sell in a 7% interest rate environment. Two factors concern me about where I live - over building and rising interest rates. I can't stop either one from occurring. One is bound to happen, the other I'm not sure about. But, this was only viable due to buying new from a builder who had their own mortgage department and were willing to pay all closing costs as a concession to the transaction. It was expensive.

I'm not sure about that PMI though lasting forever? Was that a change that occurred after we did ours? My documents say 5 years and/or 80% LTV. I'm very close to the 80% now, but still have 2 years to go. After that, I'm like any other conventional mortgage, except transferable. FHA costs me about $6k a year for the insurance, or $30k overall. When considering the prices of homes around here, a $30k swing isn't much.

[FCNova]

Yes the MI lasting forever was a recent change. I think the amount of the monthly MI has also increased. It seems like the gov't is basically trying to get out of backing mortgages by making them incredibly unattractive. Too bad lots of people don't understand them enough to realize how unattractive they are.

[compuguy]

Originally Posted by FCNova

Yes the MI lasting forever was a recent change. I think the amount of the monthly MI has also increased. It seems like the gov't is basically trying to get out of backing mortgages by making them incredibly unattractive. Too bad lots of people don't understand them enough to realize how unattractive they are.

How recent was that change? This year? Because I bought a condo with a FHA mortgage, and I swore the PMI did go away (or I'm confused and what your said is the case now). Edit: Your right, apparently the change occurred after May 31st of last year. In the long run though. I'm paying a couple hundred dollars less by owning my place compared to renting closer into DC/Tysons etc (My condo is outside the beltway, within FFX County).