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Fannie Mae Authorizes Purchase of 40 Year Mortgage Loans

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When new cars cost $5,000 consumers took our two or three year car loans. Now they are commonly a five to seven year commitment. Likewise mortgages, which, four decades ago were amortized over 20 years, then 25 years, and now commonly 30 years, may soon have a new standard: 40 year home loans.

After test marketing a 40 year mortgage for some months, Fannie Mae announced last week that it will begin purchasing them. The Corporation acknowledged that changes in "housing market affordability and requests from (our) lender partners" led to the decision to extend the maximum loan term on certain loan products.


Fannie will now purchase 40 year fixed-rate mortgages and 40-year hybrid adjustable rate mortgages (ARMS) with initial fixed periods of three, five, seven, or ten years. Not included in the new purchase standards are biweekly mortgage products, loans secured by manufactured housing, loan to value ratios greater than 95%; and ARMS with initial fixed rate periods shorter than three years (including the popular 1-year ARM) or with any subsequent adjustment period greater or less than one year. Also on the no-fly list are negative amortization loans.

Forty-year mortgage loans are not new, they have been tried, even promoted in years past and some lenders have continued to write them in special circumstances. When test marketing began a few months ago a number of mortgage pundits soundly denounced them because of the greater interest costs over the life of the loan. Conversely, however, the much lower monthly payment may make the 40-year a good choice for homeowners who have a limited time-frame in which they will own the home or keep the loan. Regardless, with Fannie opening its part of the secondary market to them, look for mortgage companies, banks, and brokers to start strongly marketing various 40-year loan products to consumers.



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Comments (39)

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I live in So. California and am looking to refinance to a 40 year loan. Who are the lenders?

Above Posted By: Sharon | Wed, 28 May 2008 11:33:42 EST

I am doing a 40yr mortgage now in Arkansas with Captial One out of Missouri. The rate is only a quarter of a percent higher than on a 30yr mortgage.

Above Posted By: Scott | Mon, 5 Nov 2007 12:50:02 EST

We are looking for a 40 year loan in Oregon. We have a first and a second that total 95% value. We would like to refi. our first mortgage if it would lower out payments. We owe 16500.00 on the first and 65000.00 on the second. Is it possible to refi. the first to a 40 year loan?

Above Posted By: Sherri | Wed, 1 Aug 2007 14:45:52 EST

You know I think the banks have all conditioned us to accept longer and longer fixed term rates of mortgages. They'd like nothing more to make us into medievel serfs and never pay off our home as they get rich. The Federal Reserve created the over-inflated home prices by lowering interest rates. Speculators and Wall Street got in the game and got rich.

Above Posted By: DCgirl | Sun, 3 Jun 2007 14:36:00 EST

Can a person in a Chapt. 13 Bankruptcy apply for a 40 year loan to save their home, especially if they have a risky loan? Where are the lenders in Texas?

Above Posted By: Fox | Wed, 18 Apr 2007 03:05:21 EST

Nice to see lenders are finally stepping up. 40 years in nothing out in CA where the median home value is $750 in many prime areas.

Above Posted By: Jay Fran | Wed, 7 Mar 2007 21:12:47 EST

Does anyone know of any lenders in the Melbourne, FL area that offer 40 year mortgages?

Above Posted By: Charlotte | Sat, 6 Jan 2007 17:47:56 EST

Does anyone know of any 40 year mortgage lenders in Maryland? Or anywhere else where we can apply?

Above Posted By: Peter | Wed, 3 Jan 2007 05:59:56 EST

I am wanting input regarding the advantages of a 40 year fixed loan from any one in Fl. What is a great company? Are you satisfied with the equity accumulated in your home. Thanks

Above Posted By: Patrice | Thu, 21 Dec 2006 07:11:24 EST

I would like to know if anyone knows of a 40 year mortgage lender in Texas?

Above Posted By: June | Wed, 20 Sep 2006 12:15:47 EST

Where in California can you find a 40 year mortgage and what is the interest rate?

Above Posted By: Chuck | Mon, 31 Jul 2006 19:58:45 EST

Realtor looking to help a client find a good 40 year mortgage in the St. Louis area. Anybody know of any lenders who are doing 40 year fixed in the STL area?

Above Posted By: REALTOR | Thu, 27 Jul 2006 09:57:52 EST

What is the dollar rate per 1000 for a 40 yr fixed mortgage?

Above Posted By: Joanne | Tue, 25 Jul 2006 09:58:30 EST

You can get a 40 year mortgage in New York State with KEY BANK. They have branches all over New York.

Above Posted By: Joanne | Tue, 25 Jul 2006 09:56:48 EST

First time homebuyer, I'm 26 years old and looking to buy my first house. I would appreciate any and all comments. Wondering about the 40 year mortgage would like any info and details and what banks in Michigan offer a 40 year mortgage?

Above Posted By: Amanda | Sat, 8 Jul 2006 13:54:15 EST

I have to second Terri's post that American Brokers Conduit (wholesale) or I suppose it's retail division, American Home Mortgage, have a good 40 year product. They're a good reputable lender.

Above Posted By: Jose | Tue, 6 Jun 2006 00:19:26 EST

I currently have two fixed 30 year loans interest only. I was wondering if I refinanced at a 40 yr. fixed and pulled money out, would I still stay in the payment bracket I'm at or would I notice a significant increase or difference?

Above Posted By: Nina Ruppe | Mon, 3 Apr 2006 15:17:46 EST

Will a 40 year mortgage change my payments by much? Currently I have an interest only which is still high in my book at 2800 a month but I truly want to lower my payments. I just want to know will it be worth it. What will the mortgage be on a loan of $427k?

Above Posted By: Fred robinosn | Mon, 27 Feb 2006 14:40:36 EST

Susie-American Home Mortgage has a 40 year conforming loan if you are looking for retail and American Brokers Conduit has it if you are looking for wholesale.

Above Posted By: Terri | Wed, 22 Feb 2006 18:59:00 EST

I've just moved into South Florida, and the house market it out of control. I've seen houses here that were $145,000 ten years ago shoot up to $459,000 and up now. How can I even compete in this market? Are there 40 year lenders for south Florida? I have a good job, but these houses are a half a million dollars! How do I compete with this? Thank you.

Above Posted By: Ben | Sun, 1 Jan 2006 09:41:18 EST

I hold a loan originator's license. I would like information on where to obtain the fixed 40 year mortgage as well as other options available with the 40 year mortgage.

Above Posted By: Steve | Sat, 26 Nov 2005 11:06:58 EST

40 YEAR FIXED RATE MORTGAGE.........I've found a list of 193 lenders, supported by Fannie Mae, who do business in Florida. Is there a way to narrow this list to JUST those that do the 40 year fixed mortagage, rather than calling all 193 of them?

Above Posted By: Zinger | Mon, 31 Oct 2005 19:03:42 EST

Have you heard of the Infinity mortgage? They have that in spain, basically you can pay interest only until "Infinity". Banks must sure make a killing from it.

Above Posted By: Mortgage Articles | Sun, 16 Oct 2005 21:52:18 EST

Looking for a 40 years mortgage rates sheet.

Above Posted By: pierre lubin | Thu, 13 Oct 2005 12:15:13 EST

Can anyone help me keep my home? there are tax liens(judicial sale)and the mortgage is behind 4 years. it was all a big joke to my ex-husband. now,my 3 sons and i have moved into the property and we need a miracle. if someone could help i would forever be grateful. i own a small cleaning business and i will work very hard to keep our home. thanks.

Above Posted By: brenda | Sun, 2 Oct 2005 21:33:45 EST

Which banks in the Maryland area offer a 40 year mortgage loan?

Above Posted By: wendy | Tue, 20 Sep 2005 16:35:39 EST

Who offers 40 year loans or residual Balance loans in Southern California?

Above Posted By: hans | Mon, 5 Sep 2005 03:29:01 EST

What are the advantages and disadvantages of a 40 yr mortgage loan? What banks in the Washington, DC area offer a 40 year mortgage loan?

Above Posted By: Sylvia | Wed, 17 Aug 2005 08:58:58 EST

Give rates on 40yr fixed mortgages.

Above Posted By: harriet | Sun, 7 Aug 2005 16:56:24 EST

What info do you have on a 40 year loan that is paid off in 30 years?

Above Posted By: J&E | Thu, 4 Aug 2005 18:51:18 EST

Does anybody know of a lender who offers a 40yr mortgage in miami, fl?

Above Posted By: MIGUEL MONTALVO | Thu, 4 Aug 2005 11:34:28 EST

Who does 40 year loans with a 3 year fixed Interest Only in California.

Above Posted By: PRMG | Wed, 27 Jul 2005 20:23:57 EST

What company offers a 40 year mortgage in Michigan?

Above Posted By: sandy | Tue, 26 Jul 2005 14:32:52 EST

Which lenders if any in California have a 40 year fixed Refinance program?

Above Posted By: tom | Fri, 22 Jul 2005 14:17:14 EST

Who has a 40 year mortgage in michigan?

Above Posted By: robert | Sat, 16 Jul 2005 20:29:19 EST

I would like to know which lender offers the 40 year mortgage. I am in New York state.

Above Posted By: Junior Hitlall | Thu, 23 Jun 2005 13:17:34 EST

Does anyone know a lender who will do a mortgage on only one score?

Above Posted By: Susie | Wed, 22 Jun 2005 16:04:03 EST

Does anyone know a contractor in the area of Delta or Mesa Counties (the Western slope of Colorado) that specializes in building green/healthy homes. My preference is a Christian contractor.

Above Posted By: Diane | Tue, 14 Jun 2005 09:04:01 EST

Does anyone know where you can find 40 Year Mortgage Rates online?

Above Posted By: KyleNY | Thu, 9 Jun 2005 16:52:14 EST


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