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40 Year Mortgage Loans

40 Year Mortgage Loans

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Published by: api-3708315 on Oct 14, 2008
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03/18/2014

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Make the most of your home investment
ESTATE
BY CHARLES SCUTT
Content That Works
For a long time, it seemed

that fixed-rate home mortgage
loans came in only a handful of
flavors: 15 years, 20 years and, at
the top limit, 30 years. But
recently, lenders have introduced
a new item to their menu: the 40-
year mortgage loan.And many

borrowers are gobbling it up.

The immediate advantage of a
fixed-rate, 40-year mortgage is a
lower monthly payment.
Consider a home buyer looking
to borrow $200,000 at 6 percent
interest over 40 years. His or her
monthly payment would be
about $1,100.That compares to
roughly $1,199 per month with a
30-year fixed loan at the same

interest rate.

The additional time on a 40-
year mortgage allows borrowers
to think a bit bigger.\u201cPeople are
living longer, so some borrowers
might be able to rationalize an
additional 10 years of mortgage
payments,\u201d says Alex Giassa, mort-
gage consultant with First
Interstate Financial Corp. in
Paramus, N.J.\u201cThe lower monthly

payment can help enable bor-
rowers to qualify for a higher
loan amount and afford the
home they want,\u201d especially if it\u2019s
a more expensive house.

Many experts say that 40-year
loans are becoming more popu-
lar as buyers face higher home
prices and are enticed by the
prospect of stretching out the

BY PATRICIA V. RIVERA
Content That Works
M

ike Ingram carefully bargain shops for most of his purchases.When it comes to home appliances, however, he

looks beyond the price tag.

Take the air conditioning unit he just pur-
chased. Before putting down his money he
closely read the larger tag on the unit \u2013 the
one that spelled out how much he would
really spend on the unit over its expected life
span.

\u201cJust as important as the cost is how much

an appliance costs to operate,\u201d says the
Seaford, Del. homeowner.That\u2019s why he
bought a 5,000 BTU Goldstar unit identified
as compliant with the Energy Star initiative, a
program introduced by the U.S.
Environmental Protection Agency in 1992
that identifies and promotes energy-efficient
products.

The typical household spends $1,500 a
year on energy bills, according to the U.S.
Department of Energy. Homeowners can
reduce their energy bills by at least 30 per-
cent \u2013 more than $450 per year \u2013 by using
high-efficiency appliances.

\u201cAs energy prices continue to rise, more
people are paying attention to the labels,\u201d
says Steve Nadel, executive director of the
Washington, D.C.-based American Council for
an Energy-Efficient Economy.

The U.S. Environmental Protection Agency
reported earlier this year that public aware-
ness of Energy Star has jumped to 64 per-
cent. In many major markets where local
utilities and other organizations use Energy
Star to promote energy efficiency to their
customers, public awareness of Energy Star is

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YOURNEWSPAPER.COM/HOMES

I Want Out. Will the Bank Let
Me Off the Hook if I Simply
Turn in the Keys?

Q:Say an investor buys five sin-

gle-family homes and then has all
sorts of problems with tenants,
repairs and code violations. The
investor attempts to sell the prop-
erties and nobody will buy. Even

the \u201cwe buy houses\u201d people won\u2019t
touch them. The investor is willing to sell just for
the balance on the mortgages, losing thousands
more than he already lost. The investor is tapped
out financially and doesn\u2019t have the money to
make improvements. What are the ramifications
if the investor just takes the deed and the keys to
the lender and gives them back? Does this rid
him of the problem? The investor has a secure
full time job and makes good money, owns his
own home, is married and has great credit, but
just wants to get himself out of this mess.

A:Giving back the keys and deeds will not solve this

problem.You \u2013 for simplicity\u2019s sake I shall assume the
investor involved here is you \u2013 owe a given amount of
money.Two things secure the debt: the properties and
you. If you do not make required payments, the lender
will foreclose and the properties will be sold.This
process is likely to result in low-ball bids, if any, and
will not generate enough money to pay off the loans.

Meanwhile, the lender will look at its other form of
security: you, the person with the good income and
nice house. If there is a way to do it, you can bet that
the lender will sue to cover the loans and the costs of
foreclosure.

Given that you are likely to lose substantial money in
all circumstances, the question is this: How do you
limit your losses? First, do not give back the keys or
anything else to the lender. Instead, have an attorney
contact them and see if the matter can be negotiated.
Second, to preserve your credit it may be better to sell
the properties for less than the mortgage amounts
rather than go through a foreclosure.You may have to
make up the difference by refinancing your home or
otherwise working out a repayment plan with the
lender.

Q:I\u2019m planning to buy a house and would like
to know if there\u2019s a landfill within a mile of the
property. Where can I get this information?
A:The seller\u2019s broker, your buyer broker and the
Ask our broker
andA
WITH PETER G. MILLER
Q
Mortgage Fundamentals:
Tally Costs, Not Just Benefits, of 40-Year Loans
Curb Energy Costs by Reading Fine Print
Kitchen cautious: refrigerators and freezers account for 17 percent of the $1,500 annual home energy costs, according to the U.S. Department of Energy. Installing
appliances designated \u2018Energy Star\u2019 can save up to $450 per year.
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SeeMORTGAGES, Page 2
See ASK OUR BROKER, Page 2

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