Is It Good To Have A Fixed Or Adjustable-Rate Mortgage 40 Year Mortgages – Are They Right For You?

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40 Year Mortgages – Are They Right For You?

A 40-year mortgage, with either fixed or adjustable rates, is beginning to receive more attention in the mortgage business. And interest rates

With rising real estate prices in 2005, lenders began offering 40-year mortgages as a viable option for buying your dream home.

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

With interest rates rising, the 40-year mortgage gives buyers the opportunity to still buy the home they want and receive a lower down payment.

For those who are not interested in putting that many years in a mortgage or in a 40-year amortization, many are also starting to consider a combination of other ARMs and interest-only mortgages. These mortgages are actually made up

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

Other mortgage options offered by mortgage lenders include a

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

Another reason many borrowers are considering, and lenders are offering a 40-year mortgage is so that buyers can spend more money during the construction of a house. By extending the mortgage from thirty to 40 years, there is always the possibility to buy the house 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 perfect credit. This will give these home buyers a chance to still invest in a home but without a large monthly payment. They need to keep in mind, though, that disadvantage of this forty years

mortgage is a higher interest rate at maturity. It also takes longer to build equity on the home because the borrower is extending more principal payments.

mortgage, which builds equity on a home.

Many lenders still find that there is not enough interest in 40-year mortgages to keep offering them through the lending company, but that may change since Fannie Mae recently announced that they would begin buying these loans. In September 2003, with a pilot program of 22 credit unions, Fannie Mae offered to buy back both fixed and adjustable rate loans 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 a 40 year

mortgage and then refinancing down the road. If you do not refinance the loan there is still the option to send in

advance payments 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 much time to build that equity and the person could pay for the home. in seventy or eighty.

The retiree may not be able to afford to continue paying a mortgage.

The bottom line is that there are a number of options for home buyers and these options need to be taken into consideration before deciding on the mortgage that best suits you. These new mortgage options also open the market for a series of new borrowers so that can still fuel even higher

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

buy the house you want. Make sure you are aware of the pros and cons and always consider your options for refinancing down the road.

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