Quote:
Originally Posted by persian54
I'm not familiar with how FHA loans at all, for forgive my ignorance... but doesn't one have to pay a pretty penny every month as "insurance" ? Money that doesn't actually go towards the equity of the house, but is a buffer due to the low downpayment?
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Yes, FHA has an upfront fee (a percentage of the overall loan), and a monthly insurance fee until you reach 20% I believe.
It's supposed to be a buffer as it supposedly adds to FHA reserves in case of default. That reserve in July when 48laws gave his horrible advice was around 1% (of total liabilities). Now it's even less than that, and FHA is going to need a public, tax payer, subsidized bailout.
Of course I predicted this in July 2012, and guys like 48laws were quick to point out that the mortgage insurance would save FHA as a "buffer", as you can see, he was horribly wrong.
But I guess we all have to pay for it since guys like 48laws who thought 3.5% down was a smart mortgage decision are now dumping their bad financial decision on all of us. Go USA!