40 Year Mortgages Going Mainstream
Tip It!40 year mortgages are becoming more popular. To date, these loans have been rare because banks couldn’t sell them to investors via Fannie Mae or Freddie Mac. However, that all changed this month when Fannie Mae started buying 40 year mortgages. Whether or not they’ll catch on is a different issue. While monthly payments are a bit lower, you’ll end up spending substantially more over the life of the mortgage — not only due to the extra ten years of amortization, but also because rates are typically 1/8 to 1/4 point higher than for a 30 year mortgage. On top of this, interest-only mortgages offer lower initial payments, and have thus been gaining in popularity in the last couple of years as real estate prices have exploded.
Published on June 3rd, 2005 - 7 Comments
Filed under: Real Estate
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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7 Responses to “40 Year Mortgages Going Mainstream”
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June 3rd, 2005 at 7:54 am
Two words for consumers: bad idea.
June 3rd, 2005 at 8:16 am
Three words: Ticking time bomb.
June 3rd, 2005 at 9:03 pm
Lotsa words: That makes me sick! Have Americans (and Fannie-whoever) lost their common sense?
June 3rd, 2005 at 9:10 pm
Yes, it seems they have lost their common sense. Clearly, the need to extend mortgages even further just so people can afford to buy a house is a sign that housing prices are a bit too high.
June 4th, 2005 at 10:24 am
Let them do it.
It increases the price of my property while they keep paying interests to the banks I own (on stocks).
Yes, I am being Ironic.
Money and Investing
June 5th, 2005 at 1:20 am
At least 40 year fixed-rate mortgages are probably better than ARMs are now.