40 Year Mortgages Going Mainstream

Written by nickel - 7 Comments

According to Bankrate.com, 40 year mortgages are going mainstream. 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
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Comments (scroll down to add your own):

Two words for consumers: bad idea.
Comment by FMF — Jun 3rd 2005 @ 7:54 am
Three words: Ticking time bomb.
Comment by jim — Jun 3rd 2005 @ 8:16 am
Lotsa words: That makes me sick! Have Americans (and Fannie-whoever) lost their common sense?
Comment by Dawn — Jun 3rd 2005 @ 9:03 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.

Comment by nickel — Jun 3rd 2005 @ 9:10 pm
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
Comment by Jose Anes — Jun 4th 2005 @ 10:24 am
At least 40 year fixed-rate mortgages are probably better than ARMs are now.
Comment by mbhunter — Jun 5th 2005 @ 1:20 am