40-Year Home Loan Soars in Popularity

By: Gregory J. Wilcox: REALTOR® Magazine Online
An estimated 60 percent of the members of the California Association of Mortgage Brokers expect home buyers to turn to 40-year mortgages to achieve lower monthly payments in the new year.

Higher interest rates also will increase the popularity of 100 percent and adjustable-rate loans, but more than 70 percent of those polled by the group believe such mortgages can be risky for certain borrowers.

According to the association, interest rates will hit 7 percent next year. Many lenders do not offer 40-year mortgages, but Robert Kleinhenz, deputy chief economist for the CALIFORNIA ASSOCIATION OF REALTORS®, says home buyers can opt for shorter loan terms because many will move or refinance within five to seven years.