Compare Local Lenders Loan Type Select One Purchase Home Equity Refinance Debt Consolidation FHA/VA State Select a State Alabama Alaska Arizona Arkansas California Colorado Connecticut D.C. Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Credit Rating Select One Excellent Good Fair Poor
+ Related Articles
	FHA Refinance Streamline with No Costs
	Jumbo Refinance is Costlier than Smaller Loans
	Two Loans For One Hundred Percent Financing

The use of forty year fixed mortgages ground to a standstill when housing values leveled out a year ago. However Fannie Mae has considered the potential value of the concept for the increasing numbers of Americans who cannot afford to buy a home with a thirty year note. The corporation has launched a pilot program with 21 credit unions around the country, helping to make forty year mortgages available by agreeing to purchase forty year fixed mortgages that meet their criteria, just as they do with almost all thirty year mortgages in this country.

There are many analysts that question the value of this pilot program, simply because the interest rate on a forty year fixed mortgage is going to be higher than a comparable thirty year note. Interest on the forty year loan will be .25 to .375 of a percentage point higher than on a thirty year loan. Real estate professionals are making the point that any savings realized over the life of the loan are erased by the higher interest rate.

One real estate trade publication ran comparisons on monthly payments for a fifteen year, a thirty year, and a forty year fixed mortgage based on Fannie Mae's criteria for a conforming loan. With a quarter of a percent difference in interest rates, the savings on the monthly payment was less than one hundred dollars - a payment that hovered around the $2,000 mark on a $360,000 loan. Obviously, with a forty year fixed mortgage you'll be making payments for ten more years. And the difference in total interest paid over the life of the loans is staggering - almost $200,000.

Forty year fixed mortgages seem to be considered a poor choice for a home purchase; the experts argue that you can do better with a 3/1 or 5/1 ARM. It is important to consider household circumstances on these loans, however. Some people feel they cannot afford to gamble on an adjustable rate and cannot afford or do not qualify for a thirty year fixed rate loan. For those people, the forty year fixed mortgage may be a reasonable answer, if for no other reason than it is the only way they can become homeowners.

• Free 3-in-1 Credit Report.
• Enhance Your Identify Protection.
• Great for refinancing, buying a car!