| A 40 year mortgage, with either fixed or adjustable | | | | to keep in mind, though, that the disadvantage of this |
| rates, is starting to receive more attention in the | | | | forty yearmortgage is a higher interest rate in the long |
| mortgage business. With interest ratesrising and real | | | | run. It also takes longer to build up the equity on the |
| estate prices booming in 2005, lenders are starting to | | | | home because the borrower is further stretching out |
| offer the 40 year mortgage as a viable option for | | | | paying on the principal of themortgage, which builds |
| buying your dream home. | | | | equity on a home. |
| Although the 40 year mortgage has been around | | | | Many lenders are still finding that there is not enough |
| since the 1980s, it only made up for a small percentage | | | | interest in the 40 year mortgage to sustain offering |
| of loans, less than 1% at most times. Now with higher | | | | them through the lending company, but this may |
| interest rates, borrowers are looking for a way to | | | | change since Fannie Mae recently announced that |
| save money with lower monthly payments. | | | | they would begin purchasing these loans. In September |
| With rising interest rates, the 40 year mortgage gives | | | | 2003, with a pilot program of 22 credit unions, Fannie |
| buyers the opportunity to still buy the home they want | | | | Mae offered to buy back both fixed and adjustable |
| and receive a lower payment. | | | | rate loans and will soon expand the pilot program to |
| For those that aren't interested in putting that many | | | | many otherbanks & financial institutions. |
| years into a mortgage or in a 40-year amortization, | | | | For borrowers who don't have many options, consider |
| many are beginning to also consider a combination of | | | | starting with a 40 yearmortgage and then refinancing |
| other ARMs and interest-only mortgages. These | | | | down the road. If you don't refinance the loan there is |
| mortgages are currently making upa large percentage | | | | always the option to send inpre-payments as your |
| of the mortgage originations and continue to increase | | | | income increases. |
| as interest rates increase. These loans are often | | | | Most experts are noting that these lengthier |
| referred to as option ARMs, or short-term ARMs that | | | | mortgages are not good for older couples or an older |
| start out with introductory rates of as low as 1%, but | | | | person seeking to invest in a home because it will take |
| give buyers a variety of mortgage payment options. | | | | too long to build up that equity and the person could be |
| Other mortgage options that are being offered by | | | | paying for the home into their seventies or eighties. |
| mortgage lenders include a | | | | The retired person may not have the means to sustain |
| 20-20 mortgage, where the interest rates would adjust | | | | paying a mortgage. |
| after the first 20 years. | | | | The bottom line is that there are a number of options |
| Another reason many borrowers are considering, and | | | | for homebuyers and those options need to be taken |
| lenders are offering a 40 year mortgage is so that | | | | into consideration before deciding on the mortgage |
| buyers can spend more money while purchasing a | | | | that best suits you. These new mortgage options also |
| home. By stretching out the mortgage from thirty to 40 | | | | open up the market to a range of new borrowers so |
| years, there is still the possibility of purchasing the | | | | this could always fuel even highervalues in the real |
| home of your dreams. | | | | estate market. As well, a 40-year mortgage is not the |
| The 40 year mortgage is also good for first time | | | | best option for everyone but there are viable |
| homebuyers or those who need extra help, like young | | | | alternatives that can help youpurchase the home you |
| couples or those withless than perfect credit. This will | | | | want. Be sure you are aware of the advantages and |
| give those homebuyers a chance to still invest in a | | | | disadvantages and always consider your options for |
| home but without a high monthly payment. They need | | | | refinancing down the road. |