PORT ST. LUCIE, Fla. — This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.
"If it helps people get into a house, it's a good thing," Sonsire Gonzalez, a real estate agent in Port St Lucie, said.
The idea is to reduce monthly mortgage payments, which have been rising as mortgage rates go up.
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Redfin.com reports over the last year, the average mortgage payment has risen 30% to a record $2,563 a month.
"Forty-year mortgage stretches out that payment over a longer period of time, so it makes for a lower payment, which is what a lot of buyers need right now," Gonzalez said.
Bankrate.com recently compared 30- and 40-year mortgages and found on a $312,000 loan at 6.85% interest, the monthly payments were $2,044 for 30 years and $1,904 for 40 years.
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The extra 10 years also added more interest, close to $170,000 more, but in the short term, experts said it can make a difference, especially since many homeowners hardly stay in one house for 30 or 40 years.
"It's going to attract buyers struggling to put their money together for getting into a house, like a first-time home buyer, and it's great because it saves them from wasting money on rent," Gonzalez said.
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