Thinking of going FHA 3.5% downpayment

M

mk3gtr_IHB

New member
I've been searching for a home for the past 6 months and have gotten pretty frustrated with the current situation of the RE market. We are currently renting a townhouse in the SGV area, but my wife really wants to move to a more humid place with no carpet (she is very sensitive). I'm pretty convinced that prices need to drop in the future with the "shadow inventory", unemployment and foreclosure rates. When, and the rate that this will happen is obviously unknown to most of us. I've found some REO that seem to be priced "right", but have lost in the retarded bidding wars that ensue. Most other properties are pretty overpriced IMO. I'm entertaining the idea of buying a small new condo/townhose in OC using FHA 3.5% downpayment. I would look to buy something under $400K That way I don't risk the the downpayment that I have saved if RE prices really take a dip in the future, and can use the downpayment to really buy the house that we want. Also, the monthly payment wouldn't be too high (hopefully). Few questions:



- Is this a sensible idea?

- I'm thinking that it might be easier to buy a brand new condo/townhouse using FHA loan. Decently priced properties under 450K in decent areas are getting snapped up in bidding wars. Is this a correct assumption?

- I'm thinking the new condos in Irvine might be an option or maybe the new construction around Mainplace in Santa Ana. Any other ideas?



I need to take a look at HOA and Mello Roos rates of new developments to really calculate the monthly burden. I know renting a different place is also an option, but if somehow I can work out a monthly payment similar to my rent using only 3.5% downpayment then this would look like a better option.
 
[quote author="mk3gtr" date=1257819886]

I need to take a look at HOA and Mello Roos rates of new developments to really calculate the monthly burden. I know renting a different place is also an option, but if somehow I can work out a monthly payment similar to my rent using only 3.5% downpayment then this would look like a better option.</blockquote>


If you can find a home where your monthly payment would be similar to what you'd pay in rent (even with just 3.5% down), it would be a clear sign that whatever home you bought is a pretty good deal and you should definitely pull the trigger on the FHA loan. I doubt that you'll find that type of situation but best of luck and let us know what you find.
 
It sounds like you want to own a home, but you don't really want a small condo in Irvine or near Main Place. It also sounds like you have been saving for the home you would really want, but have not been able to get any of the better deals available. It would not make sense for you to buy something right now that you don't want to bein for the next 7 + years.



Even if you keep building your DP fund for the home you want, you could easily be prevented from getting it if you own something else with little equity, much less negative equity. You will need to qualify for the costs of the new home PLUS the costs of the condo you bought if don't want to sell it. It costs a minimum of 6% to sell a property, so even if prices don't decline, you really wouldn't be able to sell and break even for at least 4 years.



If you really would like to move now, then move and rent because at some point you will find a home that you really want. On the other hand, if you want to be in that condo for the next 7 years, then it's probably not a bad move.
 
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