How Much Is A 30-Year Fixed-Rate Mortgage Going For 40 Year Mortgages – Are They Right For You?

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40 Year Mortgages – Are They Right For You?

The 40-year mortgage, with fixed or adjustable rates, is starting to get more attention in the mortgage business. With interest

With the rise and fall of real estate prices in 2005, lenders began offering the 40-year mortgage as a viable option for buying your dream home.

Although the 40-year mortgage has been around since the 1980s, it offsets only a small percentage of loans, in most cases less than 1%. Now with higher interest rates, borrowers are looking for a way to save money with lower monthly payments.

With interest rates on the rise, the 40-year mortgage allows buyers to buy the home they want and get a lower payment.

For those not interested in putting that many years into a mortgage or into a 40-year amortization, many are also starting to consider a mix of other ARMs and interest-only mortgages. These mortgages are currently being paid off

a large percentage of mortgage loans and continue to rise as interest rates increase. These loans are often called option ARMs or short-term ARMs, which start with introductory interest rates as low as 1% but give buyers a variety of mortgage payment options.

Other mortgage options that are offered by mortgage lenders include a

20-20 mortgage where interest rates will adjust after the first 20 years.

Another reason many borrowers consider and lenders offer a 40-year mortgage is that buyers can spend more money while buying a home. By extending the mortgage from thirty to 40 years, there is still an opportunity to purchase the home of your dreams.

The 40-year mortgage is also good for first-time home buyers or those who need extra help, such as young couples or those with

less than ideal credit. This will give these homebuyers a chance to continue investing in a home, but without a high monthly payment. They must bear in mind, however, that the disadvantage of these forty years

mortgage is a higher interest rate in the long run. It also takes longer to build equity in the home as the borrower further stretches out the principal payment on

a mortgage that builds equity on a home.

Many lenders are still finding that there isn’t enough interest in the 40-year mortgage to keep offering them through the lending company, but that could change as Fannie Mae recently announced that they will begin buying these loans. In September 2003, with a pilot program of 22 credit unions, Fannie Mae offered fixed and variable rate loan repurchases and will soon expand the pilot program to many more

banks and financial institutions.

For borrowers who don’t have many options, consider starting with 40 years

mortgage and then refinance down the road. If you do not refinance the loan, there is always the option of sending

prepayments as your income increases.

Most experts note that these longer mortgages are not good for older couples or an older person looking to invest in a home because it will take too long to build up that equity and the person may be paying for home until the seventies or eighties.

A retiree may not have the means to keep up with a mortgage payment.

The bottom line is that there are a number of options for home buyers, and these options should be considered before deciding on the mortgage that suits you best. These new mortgage options also open up the market to a pool of new borrowers, so that can always drive even more

real estate market values. Also, a 40-year mortgage isn’t the best option for everyone, but there are viable alternatives that can help you

buy the home you want. Make sure you are aware of the pros and cons and always consider your options for refinancing in the future.

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