State to Offer 40-Year Home Loan for First-time Buyers

[The Straight Story]

State to Offer 40-Year Home Loan for First-time Buyers
Written for the web by C. Johnson, Internet News Producer


California is getting into the 40-year home mortgage business. The option is seen as a way to qualify more first-time buyers into the state's expensive housing market.

Private lenders have been offering 40-year home loans for some time. Now the California Housing Finanace Agency has announced it will offer a fixed interest rate, 40-year loan with no money down to first-time buyers beginning this spring.

CFHA says its long-term loan will be for those who cannot afford payments on a traditional 30-year loan and are not able to absorb increased payments with adjustable or shorter-term loans.

"I think it's great and I think it's going to assist more people into obtaining their dream of owning a home," says Beth Gewerth, a mortgage consultant with American Home Mortgage, which has been approved by the state to offer the 40-year loan.

http://www.kxtv.com/storyfull2.aspx?storyid=16482

[OrangeCountyDemocrat]

1. This Is Great....

I can get a 40-Year Loan, and have it paid off by the time I'm 80. Now I can get that Expensive & Oversized home I've always wanted.

I can't wait!

[The Straight Story]

2. I wonder if trailers are covered?

You can get a decent used one for 10-20k, So about 250-500 a year on a 40 yr loan (not including interest, so about 500-1k/yr).

That might be interesting....

[Kierkegaard]

4. Well, it's one way to maintain the housing bubble for a little longer.

Adding a couple hundred more feet to the fall won't make it hurt any worse.

[LynneSin]

7. Consider the price of housing in California

A $300,000 house puts you in the BAD neighborhoods of California. For $500,000 you might be able to get a nice cutter-cutter 3-bedroom job in an ok neighborhood. What you're talking about probably runs in the several million dollar range

[CoffeeCat]

3. Banks are now in the business...

...of providing consumers with just enough rope with which to hang themselves.

Banks encourage irresponsibility.

I read recently that 30 percent of all new home loans are interest only. Ok, that's fine if you plan on living in your McMansion for a few years. However, most of these loans are secured by irresponsible people who want to keep up with the "Joneses" and live in a small mansion that they really can't afford.

Now, they're extending a mortgage to 40 years.

The banks are laughing all the way to the bank. :)

[Kierkegaard]

6. Most creditors, including banks, have long been in the 'rope' business.

The 50's and 60's 'earn an honest buck' days are long gone. Now it's 'get what you can, while you can.'

[Gormy Cuss]

5. Why is it called homeownership when the bank owns the majority stake?

I've never understood that one.

On topic, 40 year loans are better than some other products offered to people who can't swing the old-fashion 30 year fixed rate products.

I love the language "assist...into obtaining their dream of owning a home." They won't be owning it for a very long time. What they will do is increase wealth through appreciation, assuming that the housing market continues to appreciate.

[AllegroRondo]

8. Japan offered 50-100 year loans

that were meant to be paid off by the home owners children and grandchildren. In the boom of the 80's it was the only way to afford a home in places like Tokyo.

But I'd rather see a 40 year loan, than "interest only" loans that do the borrower no good at all.

[wicket]

9. Agreed

n/t