Not as much as the interest-only loan and ARM's do.   They're going to devastate the housing market even as they make more money for refinancers.

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(Mine's a 30, fixed-rate. )

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Granted, it doesn't make *THAT* much difference how long the loan is, if you plan on selling soon.  But how desperate your neighbors are to sell and cut their losses makes a *HELL* of a lot of difference.

The problems are many-fold.

• Forty and 50 year loans are amortized so that it takes an eternity to build up any useful equity.  Sure, you can try to pay extra principal each month, but if you have the discretion to pay extra principal, you likely don't need the piddly $50 savings that a 40- or 50-year loan would effect.
• If a smaller payments lets you borrow a larger sum to buy a more expensive house, you're living an illusion if you place more emphasis on the size of the payments rather than the size of the debt.  If so-called creative financing can net you $500K rather than $300K, guess what -- you owe $200K more in real, live dollars than you would have otherwise.  However you go about it, you have to pay back $200K more than you otherwise would have to.
• Finally, by supporting the market for these loans, you're supporting the market climate that allows home prices to go artifically high.  We wouldn't be in the mess we're in if there wasn't demand for these goofy loans.

Which brings to my mind the biggest financial wrong turn that our society seems to have made:

More and more of us have come to accept a lifetime of debt payments for cars and housing as a fact of life.  There is no reason to accept that.

Thr foreclosure rate in Kern County is already climbing like a homesick Angel. The Real Estate Industry has started their agressive marketing, to convince people that it's all still good. They're talking things up, in the News Paper too. You know, when this starts, they're trying to sell the general public a bill of goods.

Houses are sitting on the market for several months, or the owners are coming WAY off of their asking prices. People are walking away from recently purchased homes for many reasons. Things should be ripe for the pickin's in a year, maybe year-and-a-half. It's like watching a wave brake over.

You ain't seen nothing yet, Tony.  Wait till the ARM's kick in and peoples' monthly payment doubles--and when they try to sell, they find prices have fallen to where they're upside-down.  I wouldn't buy a new house right now, it's like buying stuff for yourself the day before Christmas.  Why not wait until the after-Christmas sales you KNOW are coming in a short while?

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The problem with waves like that is a lot of people down.  And housing is the only thing keeping the US economy afloat.

Let's say you need to borrower $300,000. On a 40 year loan, (7.125%) with a balloon due in 30, here are the facts: Your principal and interest only payment is $1891.59. In 30 years you will have paid $542,992.99 in INTEREST ONLY. Your principal has reduced from $300,000 to 162,944.70. Your loan is now due and payable and you still owe the $162,944.70 AFTER 30 YEARS.

Oh, but you wanted a 50 year loan?  Do you really want to know the figures? Ha ha.

I don't mean to say that a 30 year loan does not have an astronomical amount of interest paid, but at least there is not a balloon payment that you are left hanging with. In an example of a straight fixed 30 year loan. Let's go with the exact same figures, apple to apple. Principal and interest payments would be $2021.16. You will pay $427,612.12 in interest over 30 years. But your loan will be paid off in full, you paid less in interest, and you own your home outright.

Too many youngsters (and yes, some of the older adults who should know better) see, want, and will do anything to buy their mansion. I say go for it. Us hawks are waiting for you to crash and will scoop up your houses on a foreclosure market that is destined to be a real kicker. After all, we are the ones who scrapped and saved our money the old fashioned traditional way!

Bravo, Bakonative.  Three cheers from someone who made it: me!

When someone buys a car, he is considered a sucker if he bases his purchase decision on the size of the payment rather than the price of the car.  Why is it suddenly OK to think this way when buying a home?

Apparently housing values are about to go negative for the first time in, well, *EVER*, according to some experts.  Sure, values in ACTUAL terms declined between '79 and '84, but that's because they didn't keep up with inflation.  We're apparently about to see some sticker shock.  Thank you, Mr. President (I'm in a unique situation with my refi last year, but it's going to hurt a LOT of people.  We're talking possible recession, oh, about the time of the mid-term election.  But as Bako points out, a lot of vultures are circling.)

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http://www.thebusinessonlin...

All that a 50 year loan means, is that you get to paint the walls the color of your choice.  Otherwise you don't own your house anymore than when you rented one.  The lending institution will always own it. 

50 year loans are a scam on the poor.

There's a *REAL* interesting graphic attached to this article on household debt:

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http://www.dailykos.com/sto...