Broker telling me to go FHA over conventional due to "assumability"?

[Rakin]

Assumability of a 5% loan may be a big selling factor in years ahead if interest rates ever return to 7% and more. If we see 9+ it would really be an advantage.

[mckeesport_alum]

Originally Posted by chet everett

Whoa! No offense meant, and I do try to read the newspaper coverage of areas across the country that are doing better than average, so I know that PNC is doing OK as far as bigger banks go, and CMI is still pretty hot, but I wish to present some articles that should temper your enthusiasm:

Siemens to repay $468,750 in Pennsylvania grants - Pittsburgh Tribune-Review

Target 11 Investigates Local Stimulus Money - Target 11 News Story - WPXI Pittsburgh

2nd UPDATE:Murtha, Major Force In Defense Spending, Dies At 77 - FOXBusiness.com (http://www.foxbusiness.com/story/markets/industries/nd-updatemurtha-major-force-defense-spending-dies/ - broken link)

Pittsburgh youth kick-off what Congressman Doyle calls a “swell of grassroots action” « It’s Getting Hot In Here

Now maybe I am way wrong, but taken together I see the "pipe dreams" about green energy being contrasted against the reality of allegedly smart firms like Siemens saying at least some kinds of technology are simply not worth pursuing, and giving back grants to the government. I also note that the largest force in bringing that government funding to Western PA being DEAD and his heir apparent saying , in effect, "those days are gone"...

Now I am generally a pretty optimistic and realistic person, so for me to say "hey buddy any hot area can cool off real real fast" is NOT meant as a slam, just a gentle reminder that if you CAN afford to handle 20% but you CHOOSE not to please don't SPEND any of the fake "extra money" but hang on to it if things cool way off. OK?

I'm definitely aware of the risk. However, the area I'm looking to buy in is in high demand for college students as well as young professionals / couples in their 20s-30s. The area will level off someday but there is still lots of business growth, lots of renovating / updating of older houses, and properties sell at around 95% of listing price.

The extra $16,000 needed to make the down payment 20% does exist and is readily available to me. However, I need to evaluate the pros and cons of using it to add to my down payment, using for an emergency fund, or investing in my business. I've been burned more than once in my life for failing to diversify.

[chet everett]

Sounds like a solid plan -- just the way it first came across was "I don't want to tie up any more money than I need to and this place is going to be a can't lose" -- as you can guess there are LOTS of upside down borrowers that believed the same thing...

Good Luck!

[VictorBurek]

Originally Posted by hammester

Why buy a house and then sell it 5 years later? Most of the money that you pay towards your mortgage is going towards interest and not principal. If you had a $200K mortgage at 4.75% for 30 years, after 5 years you would have paid $45,592 in interest and only $17K in principal. When you sell you figure a 5% realtor commision which would be 10K (assuming property values stayed the same). This is also not taking into account property taxes, home owners insurance, repairs, maintenance, ect. I did not assume property value gains or taxes because I do not know what market you are in. This is just to give you more information to make your own decision.

I think the poster should still buy. I guess you are suggesting they rent. Well, if they rent a comparable house it would cost them about $1500 per month. Over 5 years that is $90,000 in rent!!!!! If they buy, yes they are paying the interest, but it is tax deductible. But when they sell they would get some equity from the sale even if the property had 0 appreciation. I think most of the country will start to see some appreciation in home values. The Case Shiller report indicated 14 of the 20 metropolitian regions in the US posted monthly gains for the last 2 months.