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Logan Mohtashami says

You should have refinanced in 2012 to a conventional.

I could have but my FHA loan is also very one sided into my favor.
No late fees,the interest rates can never increase, one payment deferment a year with no penalty, and a few other unheard of perks that have already saved my ass.

Well not that it saved my ass, but at one point this year, I was waiting for client to pay. So we paid the mortgage a little later than the 15th when my wife always paid it. I did call them and inform them that I was going to be late. But the next month we got a call from their "Collections" department, trying to strong arm me, on the 3rd of the next month.
I told her my wife always pays on or before the 15th for the last 3 or so years(at that time). She got really shitty and snapped and said. "It's due on the 1st, blah blah bla" I said "it says right on our mortgage contract that there is a two week grace period. ". Then she tried to convolute the meaning of that, and still held her position that I the payment was due on the first.
I then informed her that if the mortgage doesn't have any late fees, and the rate can't go up as the result of me paying late. Then my wife will continue to pay the mortgage on the 15th, and I did not appreciate the bank sicking their "Collection department" on this. After the way i informed them last month of my intentions, and now here they are only on the 3rd of the month harassing me like I'm a deadbeat. Had a normal bank rep called me and had a less threatening tone conversation with me. I might have been willing to change our paying habit.

The last thing I need is "Conventional loan" where the banks ends up owning my house 20 years from now, because I'm week behind on my mortgage. So they called the loan.

I'm locked into a contract that was created by a Federal act of Congress.
And it's pretty sweet, I would be stupid to recast my loan to try to save $70 over a few years, but lose so much legal standing in my mortgage that I currently have.

Now is about the tax roll assessment period, and I'll get the escrow statement in a few weeks I'll sort it all out and get the PMI off my mortgage.

I do plan on paying this off early eventually, or I'll sell it and move on.
But I'll never just refinance to be out of a FHA loan. Unless some future President fucks me over and nullifies this Mortgage.

Logan Mohtashami says

Conventional Loan

4% First Lien rate .55% PMI

So you have a total 50 basis higher on a FHA loan

Does your 1.30% include UFMIP also? That is nearly the amount of the downpayment, like you stated earlier.

I also didn't realize you were talking about conv (>80% LTV) with PMI. I am thinking of conv (>80% LTV) without PMI, which I qualify for. In my opinion, the latter is a great deal. There is very little in interest payments, so I can slap down 10% down and spread out the other 10% over the life of the loan while only paying a slight bit more over 30 years.

Logan Mohtashami says

FHA loan

3.75% First lien rate 1.30% PMI

Conventional Loan

4% First Lien rate .55% PMI

So you have a total 50 basis higher on a FHA loan

I got my loan at 4.5% I just can't justify refi my loan just to shave a few dollar off.

If things got tight, and I had to scrounge up a $1200 mortgage somehow, there's not much difference in having to scrap together another hundred and come up with a $1300 mortgage.
I would rather be dealing a bank that wont send the locksmith over while I'm already dealing with enough financial stress.

There's the small picture then there's the bigger picture.
I listened to all of the sob stories about people losing their houses, and the all start out with someone trying to either shave money off their mortgage. Or taking out a HELOC on a house they owned outright.

It's your house, not your creative investment vehicle. Credit cards I'll be a little more trusting with. But not a mortgage. I wish all mortgages were FHA mortgages, or least mortgages that were written as fairly as mine was.

JH says

I can slap down 10% down

You can do 81%-95% conventional loans now

- NO UFMIP cost

- Lower PMI rate

A lot less paperwork than a FHA loan.

Just a 2 year wait time if you want the PMI to be removed by the lender, if you don't refinance out of it.

Here is a good example

Last year a client of mine bought a home

Agency Jumbo Loan over $417,000

15% down

4.75% rate with PMI

2 months ago I refinance him out of PMI because his home went up 7% in value from last year and he got a 4.5% rate

No cost loan

Math makes the loan happen, if it makes sense it makes sense

Logan Mohtashami says

You can do 81%-95% conventional loans now

Personally, I can get 4.32% APR (up to $625k) with as low as 5% down, no points, and no PMI ever. But I realize most don't have access to that.

Logan Mohtashami says

Here is a good example

...that example is a good deal I agree. You must have more strict borrowing rules than FHA... 700 FICO? 28/35% DTI?

JH says

...that example is a good deal I agree. You must have more strict borrowing rules than FHA... 700 FICO? 28/35% DTI?

I work with over 10 lenders so each has a different pricing model for PMI

620 Fico
DTI can't over 43%
5% down needed
Lower the fico score the higher the PMI % will be ( 5%) LTV pricing gaps

Logan Mohtashami says

620 Fico

DTI can't over 43%

Those seem low and high, respectively for less than 20% down, but when 'values' are going up over 10% annually in OC, then the math works. If values drop, those loans could be challenging because clients would not get out of PMI, although they are far better than ARMs or FHA!

JH says

If values drop, those loans could be challenging because clients would not get out of PMI, although they are far better than ARMs or FHA!

All I care about for housing is that we verify income. Loans are all acting better this cycle because we verify income and for the most part, buyers have to put money down. So, this means we are back to a housing cycle where we need a job loss recession to create a distress market.

Crazy to think that we still have 4 million homes in distress in 2014, so we haven't even cleaned the distress homes from the other cycle.

Logan Mohtashami says

Loans are all acting better this cycle because we verify income and for the most part, buyers have to put money down.

...and because home values are increasing.

JH says

and because home values are increasing.

Even if home values didn't rise, now that we have sane lending standards, the market is back to normal.

I did a interview with Bloomberg today talking about that. However, as always the reason why housing has been soft is because Americans don't make enough money

https://www.youtube.com/watch?v=o9O_FDLPdgA&t=10m35s

Logan Mohtashami says

the market is back to normal

for those who can afford it. you know the OC market is not affordable. The only reason the lending market here is stable is because there is very little inventory thus fewer mortgages than in previous markets. Sellers are waiting and waiting for someone to come by with the asking price, ignoring low ballers, and eventually everything is selling. Because there is little to no competition from the sellers side. If those 4 million distressed were released to the market, however......

Logan Mohtashami says

Americans don't make enough money

or prices are too high. We all know that 2006 prices were much higher than historical norms. Now that we are back within 10% of that peak, we are back to historically unaffordable

4 of the 5 counties in So Cal ( YoY Sales) are down -13% ... -22.7% with higher inventory in all counties only Ventura is down less than double digits down -6.2%

Logan Mohtashami says

JH says

If values drop, those loans could be challenging because clients would not get out of PMI, although they are far better than ARMs or FHA!

All I care about for housing is that we verify income. Loans are all acting better this cycle because we verify income and for the most part, buyers have to put money down. So, this means we are back to a housing cycle where we need a job loss recession to create a distress market.

Crazy to think that we still have 4 million homes in distress in 2014, so we haven't even cleaned the distress homes from the other cycle.

What will it take to get the 4 million homes cleaned out?

Analyzer says

What will it take to get the 4 million homes cleaned out?

An act from Congress to allow judicial courts to not allow people to take forever to close.

roughly 3 million are still delinquent so that time lime is still 1-3 years. Less than a million are foreclosed that aren't on the market

DTI/LTI problem indeed. As a mortgage broker/lender/whatever you call it a problem with I. However, as a buyer, I call it a problem with L. You say incomes are too low, I say prices are too high.

JH says

You say incomes are too low, I say prices are too high.

It's actually part of the same equation. #DTI because higher home prices raises Debt to income ratio's

"Home prices are too damn high!"

The term “housing recovery” suggests that home prices are now “returning to normal”. In truth however, prices are rising beyond economic reality of most Americans. While home owners and housing pundits alike were glad to see the return of home values to nearly pre-recession levels in some areas, nary a thought was given to how to how this would impact demand. Prices were up 15%-45% in 2 years — the biggest 2 year expansion we have seen outside the bubble years. While we are seeing some price reductions, there really isn’t any meaningful way to get a price correction in the market until inventories increase or there is another a job loss recession. One of the best things that could happen to the housing market would be a major cooling of prices from the crazy pace we have been seeing in the past 2 years. Nevertheless, I expect home prices will continue to show growth for 2014.

Article here: Why the Financial Media and Housing Pundits Got It Wrong

http://loganmohtashami.com/2014/05/05/why-the-financial-media-and-housing-pundits-got-it-wrong/

Logan Mohtashami says

It's actually part of the same equation.

yes, exactly my point

Logan Mohtashami says

The term “housing recovery” suggests that home prices are now “returning to normal”. In truth however, prices are rising beyond economic reality of most Americans. While home owners and housing pundits alike were glad to see the return of home values to nearly pre-recession levels in some areas, nary a thought was given to how to how this would impact demand.

EXACTLY. I agree that 'recovery' and 'normal' are being used to loosely by one side of the equation. I"ll read your article later, good chat.

Logan Mohtashami says

620 Fico

DTI can't over 43%

5% down needed

Lower the fico score the higher the PMI % will be ( 5%) LTV pricing gaps

5% doesn't even cover the Realtor commissions.

jvolstad says

5% doesn't even cover the Realtor commissions.

That is to sell a home but not to get one.

When we model out how much equity is needed based on all affordability indexes a homeowner would need 28% -33% equity

Sell the home, with transaction cost covered and enough down for a 20% down payment for a move up home.

This is obvious not adding any cash into the equation and based on the 20% down payment model

This is a reason why I don't like the affordability index many people use because getting 20% down has been very difficult for main street America

CaptainShuddup says

I do plan on paying this off early eventually, or I'll sell it and move on.

But I'll never just refinance to be out of a FHA loan. Unless some future President fucks me over and nullifies this Mortgage.

Or Activist Judge, I should add to the list.