How many of you are payment buyers?

Amen. A lot of "affordable" loan programs have been quietly introducing the 40yr scheme into NY in the past year or two. How long before the 100yr mortgage is standard?

While you are at Why not make it a 40 year balloon payment @ 0%

Remember a cash buyer never goes underwater/upside down.

Yep, they have ultra-long mtges in Japan. Trouble is, most of the new construction won't last that long.

nyc10023, how long go mortgages get in japan? Did ultra long term mortgages there come about as a response to the real estate crash of the 90s?

This is a big problem (depending on your vantage point) - real estate is primarily purchased as "how much can I afford monthly" and not a "fixed" purchase price. The street value is tied to the current low monthly cost gimmick - balloon, no interest, refinance, FHA, etc. If real estate was a cash purchase, the pricing would be more rtealistic. There would be a diminished role of the opportunists -agents, mortgage brokers and the like. And we would be not so bubble oriented.

Conventional mortgages allow people to spend 3-3.5 times their annual income. If the convention is to pay cash, people would likely spend 1-2 times their annual income, since they would have to defer buying until they can could save the balance. Extending the mortgage term to 40 years increases the debt capacity somewhat but not that much. With the effective bankruptcy of Fannie Mae and Freddie Mac, who knows what kind of mortgages Americans will have access to.

The gov't will end Fannie & Freddie. The monster that replaces will probably act none to differently and provide much the same product, and in all likelihood be staffed by the same people(wearing different hats of course)

PMG, I thought that conventional mortgages were based on 2 1/2 times your annual salary or maybe that's an old figure.

Many years ago, people used to save until they could pay full cash price for appliances such as a refrigerator or an oven and didn't pay for that stuff on credit.

Many years ago, Well to do buyers took out a 15 year, less well to do did 30 year. Times have changed and not for the better.

Riversider, 2 1/2 times is much more comfortable, yes, and it is only with lower interest rates that people can stretch the debt capacity. If rates rise, the multiple has to come down a bit.

rs, once again simplistic analysis. back in the day of higher rates one could get a low down payment loan, with PMI, but at no more than 1 1/2 times income. and guess what, there wasn't any bubble.

times have changed. but in more ways than one.

Yes. A.R. You make salient points as well.

consider this reality when rates go up!
that 40 yr plan might have some appeal.
You would be suprised how many peeps think in monthly terms.
Talk about myopic finance.
I like the 100 yr mortgage with nothing down and no payments due until Sarah Palin scores 3 digets on her IQ test.

The 100 year mortgage in Japan was in response to ever rising prices, not the crash. We're not going to have widespread 40 year mortgages. People are just going to walk away. Duh.

If the inflation scenario proves correct borrowing @ 4-5% over 30-40 years would really work out. You pay back with dollars that are worth considerably less.

rs, inflation presupposes many, many things. many here have been calling for inflation for the past couple of years. will it hit? maybe. maybe not. deflation is the beast to worry about now. inflation, maybe later, maybe not. when everybody wants to debase their currency the effects may be muted.

Faclo maybe they need glasses. The stylish kind with the ultra thin lenses for $500. FYI my wife is a -5.00. It hurts financially to see straight.

One another thing about the car guy. He has had many many clients who were upside down on cars having gone from one mb S class to another over 2000-2007. When they couldn't add on and keep montlies below $1500/month. Thy rollled in into a heloc. Hahjajahjaj