40-year Mortgage Loans - Are They Right For You?

Now that Fannie Mae will be buying conforming 40-year mortgages from any qualified lender, it opens up additional options for the property purchaser that previously were only available with interest-only mortgages. While the difference in monthly payments between, for example, a 30-year and 40-year fixed rate mortgage might not be huge because of higher interest rates for the 40-year fixed, it still may make a difference for those borderline buyers that would not otherwise be able to qualify under the standard 30-year qualification requirements.

The 40-year Mortgage is ideal for borrowers who face affordability issues and think homeownership is beyond their reach. First-time homebuyers, or those living in high-cost areas seeking manageable monthly payments may find this amortization term attractive. The 40-year Mortgage is eligible on both standard fixed-rate products as well as our standard 3/1, 5/1, 7/1 and 10/1 hybrid ARMs.

This is best for those that are looking at a long-term investment. Just be aware that many 40-year mortgages have a balloon payment due after 30 years. Make sure you check it out thoroughly before you sign.

Here are some links articles discussing the pros and cons of 40-year mortages:
Military Money
The Statesman re: Bankrate.com
Bankrate.com
Bankrate - Older Article
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