re: 40 year mortgage gets the green light

I understand that this is new for FHA. But these have been around for at least 20 years.

I’d still call it a non-story

And people are called conspiracy theorists when they state that they are trying to create a slave class.

I’m down. I would probably take as long or a term as possible, if interest rates were essentially the same as a 30 year. You can always pay more.

A 40 year mortgage to me makes more sense than the 7 or 8 year car notes. Both are insane though.

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A 40 year mortgage to me makes more sense than the 7 or 8 year car notes. Both are insane though

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I don't know why any length is insane, without taking into account interest rates and inflation (and thus real interest rates).

So if two loan-term lengths have the same interest rate, then it makes more sense to take the longer length with a lower payment. If you just put more towards principal and make up the difference with the higher payment, but shorter length, you'll end paying it off at exactly the same.

In addition, inflation matters, and the higher the (long-term) inflation, the lower the difference in inflation-adjusted payment amounts. And all loan term lengths with the same inflation rate, especially break-even on an inflation-adjusted basis when inflation is the same as the interest rates. And when the inflation rate is higher than the interest rate, turning the real interest rates negative, then the longer the term, the lower the inflation-adjusted total in payment.

As an example, let's say someone is choosing between a 30-year and a 40-year mortgage at a 4% interest rate. As I stated earlier, if one chooses the 40-year, but pays the amount of the 30-year, then they'll pay it off in 30 years.

Regardless, let's say you only pay what is required, here is how much more/less in total, adjusted for inflation, one would pay on a 40-year one would pay at various rates of inflation.


0% inflation--16.7% more
1% inflation--11.4% more
2% inflation---6.9% more
3% inflation---3.2% more
4% inflation---0.2% more
5% inflation---2.3% less
6% inflation---4.3% less
7% inflation---5.9% less
8% inflation---7.3% less

China has 99 year leases for individuals instead of actual ownership. We're heading that way.

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China has 99 year leases for individuals instead of actual ownership. We're heading that way.

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No loans there right? For regular folks. All cash required if not mistaken

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Yea, totally worth it.

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I mean, it depends on what the real rate is and who you are. I would love to have a 40% mortgage at 3-4%. Net of deduction benefit, even 3 years ago that was still probably a negative real rate - with no margin call possible and no prepayment penalty.

I get the whole Dale Ramsey thing for the average joe, but long-term mortgages are almost a handout to competent people. The goal should be to NEVER pay it back - and interest only if possible.

If it gets you in a house and it makes the first years manageable, it’s not completely bad. I just feel like you have to do whatever it takes to get in the house. After settling in work on the rest.

I think it's just going to inflate the prices of houses just like longer terms on vehicles inflated the price of vehicles. Most people are shopping for a payment, not a total price.