Fannie Mae to Boost 40-Year Mortgages
40-year mortgages, which currently account for less than 1% of all outstanding mortgage debt, will soon get a boost soon from Fannie Mae. The company announced last week that it plans to make the extra-long term instrument a standard product. We’re not sure why there will be much demand, as a 40-year borrower only saves…
40-year mortgages, which currently account for less than 1% of all outstanding mortgage debt, will soon get a boost soon from Fannie Mae. The company announced last week that it plans to make the extra-long term instrument a standard product. We’re not sure why there will be much demand, as a 40-year borrower only saves about $30 per month per $100,000 of balance (the 40-year tends to carry about a quarter-point rate premium over the 30-year). As far as we know, no one on his death bed has ever wished he’d taken out an extra ten years on his mortgage.
Fannie Mae Plans to Increase Buying of 40-Year Mortages [WSJ]
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It’s pretty close to an I/O at that point..not a good way to build equity.