How Africa News
In May, the Federal Housing Administration announced that term options would be expanded to include a 40-year mortgage.
Dan O’Connell, an OC Home Loans Valley mortgage broker, works with people who want to buy or refinance a home.
“The short term is just that you’re going to get a lower payment and a payment that you can afford,” he said.
O’Connell said you may run into trouble if you choose to stay in your home, paying thousands more with current interest rates.
“You don’t want to get into a situation where the payments too high that you’re house poor,” O’Connell said. “By doing a 40-year term, if the payment is now affordable, and you’re worried 40 years is too long, I assure you that rates are going to get better.”
It all comes down to what fits right for you and your family’s budget, according to O’Connell.
“It’s just that we’re at a particularly tough time,” O’Connell said. “Right now, where it’s kind of the perfect storm of really high prices and really high rates.”
When it comes to adjustable-rate mortgages, O’Connell added, “The ARM pricing isn’t significantly better than the fixed-rate pricing, so it hasn’t been a viable option.”
The 40-year mortgage goes into effect on May 8.
