6/03/2005

40-year mortgages go mainstream

As this article says so well, these mortgages were not a player in the market because investors would not buy them. FNMA is now buying 40-year mortgages. But "It's not a sure bet that 40-year loans will catch on for at least three reasons. First, the interest rates are slightly higher -- usually an eighth to a quarter of a percentage point. Second, tacking 10 years onto the payment schedule doesn't save all that much money every month. Third, interest-only mortgages have exploded in popularity in the last two years, and they offer even lower initial monthly payments than 40-year loans." With rising prices, however, it gives the consumer another choice. See this article 40-year mortgages join the mix.

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