40 Year Mortgage Gaining Proponents

40-Year Mortgage Gaining Proponents(July 3, 2006) --

The 40-year mortgage is gaining moment, says Keith Gumbinger, vice president of financial industry research and publishing firm HSH Assoc."These loans have really come back in the last six, seven months," Gumbinger says. "And for certain borrowers, they can help improve affordability."The payment difference between a 30-year mortgage and a 40-year mortgage isn’t huge. For instance, a $300,000 loan at 6.5 percent, amortized over 30 years, costs about $1,896 per month, while the payment for a 40-year loan is $1,756.A plus for 40-year mortgage is that generally the lender locks in the rate. So while it is unlikely that they’ll actually have the loan for 40-years – most buyers stay in a house seven to nine years – while they have it, they can feel secure, points out Douglas Duncan, chief economist for the Mortgage Bankers Association of America. The best customers are young buyers, says Dennis Yeskey, who leads the real estate capital markets industry group for Deloitte & Touche USA, "These borrowers go into it thinking that five years from now they'll be making a lot more money, and if they sell then, it's a whole new market."

Source: The New York Times, Bob Tedeschi, 07/02/2006)