Fact vs. Fiction: The 40-year Mortgage Loan Rumors Debunked

 


Earlier this week, the internet was abuzz about a new type of home loan: a 40-year mortgage. Google searches for “40-year mortgage rates” spiked 450% — and searches for “FHA 40-year mortgage 2023″ jumped more than 2,650%.

But the excitement was misplaced because there is in fact no new 40-year mortgage. One local mortgage lender sheds some light on the trending subject.

“There is a reason why content becomes viral on social media. Although it may be tempting to accept guidance from TikTok videos with numerous views or likes, it is crucial for individuals to remain watchful, conduct their own research, and prevent the dissemination of false information.”, says Mike David, with the Oklahoma Mortgage Group.

So, what exactly is this “40-year mortgage”?

The product is not available for mortgage loans to purchase a new home or to refinance, David said. It only applies to current homeowners who have FHA mortgages and who are in need financially or have already defaulted on their loan.

A 40-year loan modification — not mortgage — can help these borrowers avoid foreclosure, David said, by extending the length of their mortgage to 40 years, which reduces the monthly payments and overall makes the home more affordable, to get the homeowner out of financial distress.

 

The government introduced the loan-modification program last year to help households that were falling behind on their mortgages.

 

Drawbacks to the 40-year FHA modification:

·        Higher interest rates than 15 and 30-year mortgage loans

·        Equity builds much more slowly.

·        Higher total cost – higher interest rate and longer term, you will pay more over time.

·        Since it’s not a qualified mortgage, it may be difficult to find a lender that offers them.

The bottom line: There is no new 40-year home-loan product. It was all a big misunderstanding.

Go to www.OklahomaMortgageGroup.com for more information



Location: Tulsa, OK, USA

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