40 Year Mortgage?

[Anonymous]

Does anyone know if FHA is offering 40 year mortgages now? 

[Lel]

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@Anonymous wrote:

Does anyone know if FHA is offering 40 year mortgages now?

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I don't know the answer to your question, but if I may offer my opinion, I don't think 40 year mortgages are such a great deal. For a $500,000 loan at 6.5%, going with a 40 year loan will decrease your monthly payments by about $250, but you'd end up paying an extra $270,000 in interest over the life of the loan. Also, because you're trying to fix the rate for a longer period of time, it probably comes at the expense of a higher interest rate as compared to a 30 year loan. Maybe - I haven't actually tried to check rates anytime recently.

[Anonymous]

Lel,

I completely agree with you, I am locked into a 30 year fixed that we will actually be paying off in 25 years.  A friend was looking at a 40 year loan for a $275k house and I was trying to explain to her that the interest will probably be higher and you won't pay down the principal very fast.  She was also saying she was going with an FHA loan and I didn't know they had 40 year mortgages.

[DallasLoanGuy]

 FHA does not offer it. It is not a good deal anyway.

A better option would be a 2/1 buydown for the short term.

[Anonymous]

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@DallasLoanGuy wrote:

 FHA does not offer it. It is not a good deal anyway.

A better option would be a 2/1 buydown for the short term.

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I would beg to differ. I have the option with FHA to go with a 30, 35 or 40 year at the same interest rate no matter which. This is in California. It may be different in other areas. Now that's not to say that going from a 30 year to a 40year is a good thing as I myself would end up paying an additional $150,000 or so in interest by the time all is said and done, but it is nice having the option. All together though it may not be a bad thing if the housing market in your area rebounds a decent amount from where it is now and you don't intend to stay in that home for the full term of the loan.

Message Edited by JR2475 on 09-09-2008 09:06 AM

[Anonymous]

Are you talking CALHFA-FHA loan.  thata is different than standard FHA loans I believe.  I know CALHFA does some 40 year loans, but they really look down upon them

[Anonymous]

That may actually be it. They have thrown so much info at me and so many different options, it is possible I am getting them mixed up.

[Anonymous]

I hear you.  I am doing a CALHFA 30 year 95% loan with a CHAp and CHDAP 2nd and 3rd 30 year deferred loan for the 5% down.  I have signed so many damned papers that I can't seem to remember much anymore.

[Anonymous]

Japan had 100 year mortgages, also known as generational mortgages. It doesn't really help affordability. Remember, housing is grossly overpriced. Look at the median income in the area, and the median home price. If the median home price is more than 3 x income - 20% downpayment, things are out of wack. Also, if monthly rent x 100 or 120 is less than buying the same house, things are grossly out of wack.

Prices could easily revert to 2001 levels or lower.

Check out professor Shiller's graph, and check out the Credit Suisse ARM reset chart.

It generally doesn't help to tell people this stuff, they still go out and buy anyways because of peer pressure and mass media marketing, but home prices are really set to collapse. The US gov't is stupid into thinking that loan interest rates have much of an effect. Higher interest rates are better for first time buyers anyways.