With mortgage rate 1% higher, are you still buying?

[gagaliya]

Originally Posted by sholden

If the premium was high enough to actually cover the risk then the government wouldn't be needed in the first place - a private entity would do it for the profit it would be making.

but you see that's not true, private entity are doing it for profit with pmi. Difference is pmi has a higher monthly cost but lower initial premium, while fha requires a higher initial cost and lower monthly (which is a good thing in case of default) I did the numbers, they are about the same for 5+ years, it's only after 5 years then pmi becomes more expensive due to the higher monthly cost. But by then, you are most likely close to the 20% range to remove the insurance anyway.

So the private entities are doing it. Fha is just much more regulated so they cant charge you all the odd costs etc...

There are so much downright criminal policies the government has done in the past 2 years in the name of financial rescue (the most recent being forcing bac to take on ml). But i do not consider issuing fha loans to be one of them.

[sholden]

Originally Posted by gagaliya

but you see that's not true, private entity are doing it for profit with pmi. Difference is pmi has a higher monthly cost but lower initial premium, while fha requires a higher initial cost and lower monthly (which is a good thing in case of default) I did the numbers, they are about the same for 5+ years, it's only after 5 years then pmi becomes more expensive due to the higher monthly cost. But by then, you are most likely close to the 20% range to remove the insurance anyway.

So the private entities are doing it. Fha is just much more regulated so they cant charge you all the odd costs etc...

There are so much downright criminal policies the government has done in the past 2 years in the name of financial rescue (the most recent being forcing bac to take on ml). But i do not consider issuing fha loans to be one of them.

If you put 3.5% down a normal payment plan would have the principal down to 80% after 10 years. So you are unlikely to be down to the 20% range in 5 unless you are making large extra payments.

Just because the government does worse things, doesn't excuse the lesser things.

[FBone]

I have a FHA loan. It was the only way I could purchase my home. However, you have to pay PMI for the entire life of the mortgage. It does add up but I had no choice. I didnt have to pay any down payment not even 3.5%.

[Delphi]

Originally Posted by elflord1973

What will the fed buy them with ? In particular, how do they buy them without driving long term bond yields up, which will ultimately put a floor on borrowing rates ?

So rate is coming down from 2-weeks-ago 5.7 to now 5.4. I believe it will come down further in another month or so. It will stay more towards 5% (not 4.5%) for the rest of the year.