Is there really an FHA 40 year mortgage?

If you’ve been keeping up with the latest real estate news, you may have heard whispers about a new mortgage product called the FHA 40-year mortgage. The media has been buzzing about it, but unfortunately, they’ve got it all wrong! Two things.

One:

The FHA does not actually lend money. Instead, it insures mortgages issued by approved lenders. So, while a 40-year term is possible for an FHA-insured mortgage, it’s not a product offered by the FHA itself. It’s up to the lender to decide whether or not to offer a 40-year term on their FHA-insured mortgages. There are no lenders offering an FHA 40-year loan. Why? No way of knowing for sure, but market demand as well as something too complicated for this BLOG called Mortgage-Backed Securities probably have a lot to do with it.

Two:

The media’s misunderstanding doesn’t end there. Many outlets have reported that the FHA 40-year mortgage is available now. Well sure I guess they are right about that…but it’s ONLY for Loan Modifications! The FHA 40-year mortgage cannot be used for home purchases or refinances. This is something that was designed to help MODIFY existing loans that are in distress. Meaning they stopped making the payments.

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It seems like the media may have been caught up in the excitement of a new product and didn’t bother fact-checking. While it’s understandable to get a little carried away, it’s always best to do your research before publishing a story. Who knows what other misunderstandings we’ll see in the news next? Maybe they’ll start reporting on a 100-year mortgage!

In all seriousness though.

It’s important to be informed when it comes to your financial decisions. While a 40-year mortgage may result in lower monthly payments, it could end up costing borrowers more in the long run due to the extended repayment period and interest accruing over time. So, if one does become available and you’re considering a 40-year mortgage, be sure to weigh the pros and cons before making a decision.

In conclusion, the media’s enthusiasm for the FHA 40-year mortgage may have led to some confusion and misunderstandings. While it’s not a product offered by the FHA itself and can only be used for loan modifications, even if it was real it wasn’t much to be excited about. And who knows, maybe we’ll see a 100-year mortgage in the news soon!

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