Wells Fargo to offer 40 year mortgages: I am not against this: Larry Cragun
Several articles have been written recently poo poohing 40 year mortgages. I think its fashionable to take this position. I also think it is stupid. The arguments against are about all the interest people will pay or about owning the mortgage for your lifetime.
I am in favor of any program that allows people to purchase a home. I have always encourage my clients to purchase the most home they qualify for. Why? Like my sister told me today, she and her husband are looking forward to retiring. They have a nice home they felt lucky to get when they bought it. They still feel that way. Now, they are considering they can sell, make some great money, supplement their retirement, and move down in price, even in a non city market.
They won’t own their home mortgage forever, because they will value down. Thank Heavens for their home. So let us not be so provincial in our attitudes. If it takes a 100 year mortgage to get people into their home, so be it. They will be better off for it, I am certain of it.
CLICK HERE FOR THE FULL ARTICLE ON THE WELLS FARGO ARTICLE BY EAST BAY BUSINESS TIMES
Larry Cragun
My comments apply, even to this, true to the my home is my castle concept.
Wells Fargo Home Mortgage said Tuesday that it will offer 40-year mortgages, adding to the bevy of creative loan products on the market to help home buyers secure financing.
“The primary advantage of a 40-year mortgage is a smaller monthly payment without the risks associated with interest-only loans or Option ARMs,” said Joe Rogers, an executive vice president at Wells Fargo Home Mortgage. “A 40-year term reduces monthly payments, making home ownership more affordable.”
But the loan comes with a big asterisk. Non-conforming loans — essentially those for more than $417,000 on single-family homes this year — are amortized over 40 years but must be paid off with a balloon payment at the end of 30 years.
Love it, love it, love it! What you pay to get into a home is all relative isn’t it? I’ve paid close to 20% interest on a rehab investment. Conservatives nearly screamed “stupid” in my face, but I made money despite the high interest! Was it worth it! Yes. The real question is whether the monthly payment allows you to build equity and “own” something? If it does, then go for it. You have to pay rent somewhere and better to pay your mortgage than your landlord’s! Look at the cash flow, not what the house will ultimately cost you. The only value money has (including interest paid out) is in what it can buy for you. I choose not to sit and look at a dollar bill for it’s aesthetic beauty. It’s all in what I can get for it as a means of exchange.
Yes, thanks Bonnie, good comments. Lar