FOX 26 Consumer Reporter Heather Sullivan has some smart sense on what some homebuyers are considering in the red hot housing market.National average mortgage rates for a 30-year mortgage have already climbed over 5% since the Fed raised interest rates in March. That and high home prices are leading some homebuyers to consider alternative types of mortgages.
"Houses now, the market, even for a 900 square foot house, the price is going up like 350 already, so it’s going to be hard," said mother LaPorsha Thomas."Yah, no way I’d be able to afford a house right now," said Katie Willig.That's leading to talk about 40-year mortgages, including by the Philadelphia Federal Reserve Chairman, and some mortgage brokers.
40-year mortgages are usually only offered by some mortgage brokers, online lenders, private lenders or credit unions. They can shrink your monthly payment. But Rocket Mortgage warns in an article to watch for higher interest paid over the longer term loan. It calculates for a $225,000 loan at 4% interest, on a 30-year mortgage, the monthly payment would be $1,074, and total interest paid would be $161,706. It says on a 40-year mortgage, the payment would be $940 a month, but the total interest paid would be $226,373.
Adjustable rate mortgage during increasing rates…Get a different broker with real advice?
40 years? ARMs? they should probably sit this one out