123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Business >> View Article

Is It Wise To Take Out A 40 Year Mortgage In Today's Real Estate Market?

By Author: jasper avila
Total Articles: 165

40 year mortgages sprung up in the late 90s from what seemed to be a necessity. As you may remember, back in these beautiful days, as far as real estate investors were concerned, housing prices were soaring! The bad part of this is more and more people were becoming unable to afford a modest home. However, spreading payments over 40 years as opposed to 30, 20 or 15 years, in many cases, made these unaffordable homes, affordable.

There were a lot of things that happened in the late 90s that helped people get into homes they really couldn't afford. 40 year mortgages were probably the least damaging of all these things. Legislatures bending regulations was probably the worst thing that happened. Then, there was the out and out evil "reverse amortization mortgage."

The Reverse Am Mortgage

The reverse amortization mortgage, or reverse am, as it was sometimes referred to, was a deal lenders made with people which made their monthly mortgage payments too low to cover the cost of the interest on each payment. Therefore, as time went on, instead of paying down the price of their mortgage, it was actually increasing. This would've been by all right if housing prices continued to soar. However, the rising housing price phenomenon did not last forever. This left many people bankrupt and foreclosed.

An Honest Option

The 40 year mortgage was really not a bad thing. It did not involve trickery in the least. In fact, those who secured a fixed rate for 40 years probably did all right. It is somewhat troubling that many people who took out these long-term contracts are now 14 or 15 years into them and still owe more than 25 years on them, but it is still not factual that they were ripped off. It may not have been the best deal ever but it certainly doesn't fit into the category of a crime. Conversely, I believe reverse amortization mortgages were and are a crime!

Things Are Different Now

Nowadays, housing prices are not soaring and interest rates are practically zero. In this economic environment, 40 year mortgages are just not around for normal housing transactions. In fact, many people are opting for 15 year mortgages instead of signing up for the old standard of 30 years. For anyone qualified, 15 year mortgage can be a great deal just because of the mere fact many lending institutions offer them at prices discounted from their 30 year mortgages.

Still, though you may want to consider taking out a 15 year mortgage if you have the opportunity, you should also consider the fact that if you take out a 30 year and it has no prepayment penalty, you can always pay ahead. This way, paying extra money monthly would be your option and not your obligation. So, using this method could possibly save you from getting into a future bind. However, as far as the 40 year mortgage option, it is just not a viable one anymore.


The author, Ed Lathrop, is a successful real estate investor and a series 3 certified commodities broker. His Website, Amortization Schedule allows you to look at and/or print out amortization schedules for any loan or mortgage.

Total Views: 102Word Count: 526See All articles From Author

Business Articles

1. Guide To Buy Carbon Fiber Motorbike Parts
Author: Lao Yutang

2. A Smart And Detailed Guideline On Making Your Catalog Pop!
Author: Shawn Nag

3. Busy – Accounting Software By Hk Computers
Author: HK Bookkeeping

4. Waterfront Resort Montauk Yacht Club
Author: Unknown Member

5. Mechanical Sifter By Chitra Machineries
Author: Chitra Machineries Pvt. Ltd.

6. Folders By Patel Printing
Author: Patel Printing

7. World Health Day 2018
Author: Phenixcare

8. Expertise In Manufacturing Monitoring, Measurement, Marking Robotics Automation Systems-micro Logics
Author: Micro Logics

9. Benefits Of Prefabhomes
Author: Vishal Shah

10. Here's Why You Should Invest In A Mobile App For Your Business
Author: Surabhi Joshi

11. Cpe Bags: Market, Trend, Andother Things To Know Before Purchase
Author: Linda

12. Keys To A Successful Job Search
Author: Umesh Ahirrao

13. Different Design Phases In Fashion
Author: Umesh Ahirrao

14. Buyer’s Guide For Finding A Reliable Commercial Rebar Bender
Author: HOPPT Australia

15. Promote Your New Facebook Page Efficiently
Author: Gaurav Rachewar

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: