Is that true?
So help me I'd never heard FHA loans were on any kind of a "sliding scale" insofar as the home payment was concerned, FBD.
All I ever thought the FHA did was -- essentially -- "cosign" a loan; thereby, guarenteeing the prospective home buyer's loan.
In fact, someone else posted the specific nuts & bolts of the FHA loan & what it came down to was:
1) No down payment required for qualifing buyers.
2) Points paid by the seller (especially in the case of a VA loan) &...
3) If the buyer defaults on their obligation the FHA will make good on whatever amount of the loan's not satisfied after the foreclosure auction.
But, a FHA loan is like any other loan in that it's a *contract*.
That is it's signed for a specific loan amount, for a specified time & with monthly payments that're agreed to upon signing lasting the life of the loan; which, makes the FHA loan "stable".
FHA loans are unlike (what I know as) a, "bubble loan" which will increase monthly payments according to rising interest rates.
Where'd I go wrong?
"Also, because of the subsidised low payments, very little equity accrues, and if the house is sold, the equity goes to paying the feds back for the subsidy."
huh? >?<
Never heard of such a thing; because, IF the FHA home buyer is in good standing when they sell their home & they sell it at a profit, that profir belongs to the seller & not the FHA.
"After the "homeowner" figures this out, he does one of two things:
A. He refinances with a private lender...and has to come up with that down pmt. anyway, along with payment for the subsidized interest and down pmt."
Which is fine & dandy with me.
Or more likely:
B. He stops making payments, turns into a squatter, and after the final eviction notice, trashes the house and moves on.
In the end; nothing ventured, nothing gained."
Ummmm, I don't think that's so, FBD.
The former buyer may walk, sure's mortgage to the bank responsible for underwriting the loan, y'know; and, that'd be the FHA.
...a.ka the taxpayer.