40 Year Mortgages, have we discussed this?

[doe moe]

Federal Housing Administration greenlights 40-year mortgages

Federal Housing Administration greenlights 40-year mortgages

This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.

www.wptv.com

PORT ST. LUCIE, Fla. — This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.

"If it helps people get into a house, it's a good thing," Sonsire Gonzalez, a real estate agent in Port St Lucie, said.

The idea is to reduce monthly mortgage payments, which have been rising as mortgage rates go up.

Redfin.com reports over the last year, the average mortgage payment has risen 30% to a record $2,563 a month.

"Forty-year mortgage stretches out that payment over a longer period of time, so it makes for a lower payment, which is what a lot of buyers need right now," Gonzalez said.


Bankrate.com recently compared 30- and 40-year mortgages and found on a $312,000 loan at 6.85% interest, the monthly payments were $2,044 for 30 years and $1,904 for 40 years.

 

[Aww Skeet Skeet!]

Quick maths on a $350k 40yr @ 6.5%

Monthly Payment (principal & interest) = $2,049.10

Interest over the life of the loan (2049.10*480) -350k = $633,568 in interest. A 30 year term is roughly 446k in interest.

Interest rate is probably higher on a 40 yr vs a 30 yr mortgage (just like a 30 vs a 15).


Sidenote: interest rates are high as fuck ( relative to the rate I got right now).

 

[mcguyver]

Quick maths on a $350k 40yr @ 6.5%

Monthly Payment (principal & interest) = $2,049.10

Interest over the life of the loan (2049.10*480) -350k = $633,568 in interest


Interest is probably higher on a 40 yr vs a 30 yr mortgage (just like a 30 vs a 15).

The cost of homes doubled in the past few years. People gonna need that 40yr to be able to afford it.

 

[Aww Skeet Skeet!]

The cost of homes doubled in the past few years. People gonna need that 40yr to be able to afford it.

A society of long-term debtors.

I'm about to start investing in those shipping container companies, or the folks that are 3d printing houses.

 

[eagle force]

the goal is to get every man woman and child locked up as a customer for the next 40 years and beyond

 

[Dr. Truth]

At these rates people going to be paying a million in interest

 

[mcguyver]

A society of long-term debtors.

I'm about to start investing in those shipping container companies, or the folks that are 3d printing houses.

I've been thinking about the shipping containers.

 

[alexw]

Americans are idiots so they'll do this dumb shit to only save $100 a month yet pay 100k more on a house they won't be able to afford the maintenance on. The feds literally want their new age slaves to spend their entire lives in debt. What a fucking country.

 

[alexw]

The cost of homes doubled in the past few years. People gonna need that 40yr to be able to afford it.

Nah the payment isn't that much cheaper. Shit is designed to fuck the poor aka 1st time home owners. 40 yr mortgage + student loans + car note + living expenses = perpetual debt aka enriching the banks.

 

[easy_b]

OK our financial situation in this country is getting very murky right now. A 40 year mortgage is not a terrible thing if the interest rate wasn’t so damn high. Yes this is going to fuck with a lot of white people to just like what’s going on with car payments.

 

[Pimpslap Slim]

Almost as bad as a 84 month car loan.

 

[easy_b]

Almost as bad as a 84 month car loan.

The fucked up thing this is going all around the world with other countries as well. I hate to say it, but it have to be a major breakdown for this to correct itself.

 

[tallblacknyc]

the goal is to get every man woman and child locked up as a customer for the next 40 years and beyond

I’ve been telling ya this.. treating everything like a monthly subscription is the end goal for big bizz.. one time payment is old news , lifetime customer is the new wave

 

[easy_b]

You basically have to be really rich to escape this bullshit. The middle class annd upper middle class on down have to deal with this bullshit. Conservative white people……you created this mess. Also, I really think this is happening so quickly because of the demographic changes in this country and in other countries.

 

[Don Coreleone]

Its pretty much time for a revolution.

 

[donwuan]

Not sure how y'all think this is bad for the borrower but good for the lender? If y'all want to loan me a quarter million and I can pay you back over 40 years run it.

 

[A to Dah K]

The cost of homes doubled in the past few years. People gonna need that 40yr to be able to afford it.

They still cant afford it, they can just qualify to get in now.

 

[A to Dah K]

These younger kids dont want to own homes anyway they dont want anything to so with commitments. That goes for jobs and relationships also

 

[Aww Skeet Skeet!]

Not sure how y'all think this is bad for the borrower but good for the lender? If y'all want to loan me a quarter million and I can pay you back over 40 years run it.

There is definitely a default risk. That's why the interest rate will be higher on 40 yr mortgages bc it's gonna take longer for the lender to recoup their money. Most lenders will originate the loan but then turn around & sell it to get their initial cost (loan amount) back and profit from origination fees. And the process starts all over again creating a new loan from the money of the sold loan.

If someone like Freddie Mac buys the loan, they'll bundle with other similar loans and sell as a security to investors. Now institutional & retail investors are in the mix as well.

 

[praetor]

That news channel did not explain this correctly.

The 40 year option is a modification and ONLY for someone who qualified for the 30 year option and went into default. Meaning it was either give them a 40 year to try to reduce the payments or take the house.

This is NOT an available option for a first time home buyer.


"The rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures. The ability to modify distressed loans extends the outstanding balance for borrowers over time, lowering the monthly payment to help avoid foreclosure."

FHA Announces Increased Forty-Year Term for Loan Modifications

The FHA rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures.

www.nar.realtor

Federal Register :: Request Access

www.federalregister.gov

FHA Approves 40-Year Loan Modifications

If homeowners with an FHA loan default, they may still be able to keep the house through a mortgage modification, which now includes a 40-year option.

www.floridarealtors.org

 

[xxxbishopxxx]

Americans are idiots so they'll do this dumb shit to only save $100 a month yet pay 100k more on a house they won't be able to afford the maintenance on. The feds literally want their new age slaves to spend their entire lives in debt. What a fucking country.

What's the other option, paying ever increasing rent?

Not everyone will have friends and relatives to shack up with and share all the expenses.

And in certain jurisdictions, there's a limit on how many non-related folks can live at the same residence.

Not saying this is ideal, but at least it's something, especially if there is no penalty for paying it off early.

 

[xxxbishopxxx]

That news channel did not explain this correctly.

The 40 year option is a modification and ONLY for someone who qualified for the 30 year option and went into default. Meaning it was either give them a 40 year to try to reduce the payments or take the house.

This is NOT an available option for a first time home buyer.


"The rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures. The ability to modify distressed loans extends the outstanding balance for borrowers over time, lowering the monthly payment to help avoid foreclosure."

FHA Announces Increased Forty-Year Term for Loan Modifications

The FHA rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures.

www.nar.realtor

Federal Register :: Request Access

www.federalregister.gov

FHA Approves 40-Year Loan Modifications

If homeowners with an FHA loan default, they may still be able to keep the house through a mortgage modification, which now includes a 40-year option.

www.floridarealtors.org

Some sites are saying this is for first time buyers too...

Federal Housing Administration greenlights 40-year mortgages

This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.

www.wptv.com

 

[xfactor]

I’ve been telling ya this.. treating everything like a monthly subscription is the end goal for big bizz.. one time payment is old news , lifetime customer is the new wave

Great post. Good to see we still have astute business men on the board.

 

[praetor]

Some sites are saying this is for first time buyers too...

Federal Housing Administration greenlights 40-year mortgages

This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.

www.wptv.com

That's the same source as in the OP. I haven't seen any other sources say this.

The second link I posted (which is just blue text) is from the government providing details.

 

[easy_b]

That news channel did not explain this correctly.

The 40 year option is a modification and ONLY for someone who qualified for the 30 year option and went into default. Meaning it was either give them a 40 year to try to reduce the payments or take the house.

This is NOT an available option for a first time home buyer.


"The rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures. The ability to modify distressed loans extends the outstanding balance for borrowers over time, lowering the monthly payment to help avoid foreclosure."

FHA Announces Increased Forty-Year Term for Loan Modifications

The FHA rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures.

www.nar.realtor

Federal Register :: Request Access

www.federalregister.gov

FHA Approves 40-Year Loan Modifications

If homeowners with an FHA loan default, they may still be able to keep the house through a mortgage modification, which now includes a 40-year option.

www.floridarealtors.org

Which is going to be most people

 

[easy_b]

Not sure how y'all think this is bad for the borrower but good for the lender? If y'all want to loan me a quarter million and I can pay you back over 40 years run it.

Yeah, but make sure you don’t have any adjustable rates.

 

[55th View]

Great post. Good to see we still have astute business men on the board.

This. Mortgages, prescriptions, hell...even Apple Music (music's all gone when you stop paying). It's not about ownership and reaching the finish line anymore. It's all about keeping you on the books as long as they possibly can.

 

[easy_b]

This post is relevant to this thread

 

[Aww Skeet Skeet!]

That news channel did not explain this correctly.

The 40 year option is a modification and ONLY for someone who qualified for the 30 year option and went into default. Meaning it was either give them a 40 year to try to reduce the payments or take the house.

This is NOT an available option for a first time home buyer.


"The rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures. The ability to modify distressed loans extends the outstanding balance for borrowers over time, lowering the monthly payment to help avoid foreclosure."

FHA Announces Increased Forty-Year Term for Loan Modifications

The FHA rule permits lenders to provide an extended modification to borrowers after a default episode to assist in avoiding foreclosures.

www.nar.realtor

Federal Register :: Request Access

www.federalregister.gov

FHA Approves 40-Year Loan Modifications

If homeowners with an FHA loan default, they may still be able to keep the house through a mortgage modification, which now includes a 40-year option.

www.floridarealtors.org

Thanks for the clarification. It's like trying to plug up holes on a sinking ship headed for an iceberg. Loan mods already exist, but 40 yr mods when the current terms are almost putting the borrower in default.... Kick that can down the road.

 

[DWBass]

Homes are built cheaply and are way overpriced. Not ever going for that BS.

 

[easy_b]

Thanks for the clarification. It's like trying to plug up holes on a sinking ship headed for an iceberg. Loan mods already exist, but 40 yr mods when the current terms are almost putting the borrower in default.... Kick that can.

That’s basically what it is and these mortgages are people that are living check to check.

 

[Aww Skeet Skeet!]

That’s basically what it is and these mortgages are people that are living check to check.

I can barely imagine paying on something for 30 years, let alone 40. If you think about it, the average age of the first time homebuyer was 36 in 2022. 76+ years old making your last mortgage payments?!? Life expectancy is only 78-79. Fuck...

https://www.thezebra.com/resources/home/average-age-of-first-time-homebuyers

U.S. Life Expectancy (1950-2025)

Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life.

www.macrotrends.net

 

[praetor]

Which is going to be most people

The peak delinquency rate due to the great financial crisis was 11.5%, over 50% would start Civil War part 2.

 

[Al Smith]

People tend to forget that these often no money down 80/20 mortgages. Let's say that you do the 40 year mortgage @ $1,904. If you pay as if you were at the 30 year term of 2044, then you're actually building equity faster because the overage of $140 is actually going towards your principal. That is kind of what my wife and I are doing with our mortgage as our equity has increased around 60K and we bought our house 4 years ago with no money down..

 

[praetor]

I can barely imagine paying on something for 30 years, let alone 40. If you think about it, the average age of the first time homebuyer was 36 in 2022. 76+ years old making your last mortgage payments?!? Life expectancy is only 78-79. Fuck...

https://www.thezebra.com/resources/home/average-age-of-first-time-homebuyers

U.S. Life Expectancy (1950-2025)

Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life.

www.macrotrends.net

Most people only stay in their homes for 13 years give or take. That's enough time to build enough equity to move to a different house and have different terms for the mortgage.

I posted about this in the housing thread. Even if someone stays in their house for longer it's still not necessarily a problem. 51% of baby boomers that are home buyers pay cash because they are sitting on a ton of equity.