History proves that every so often the real estate industry goes
through some sort of �fad� in terms of investing. These so called fads
bring in home buyers like flies to fly-paper. First were the crazy loans
given away at ridiculously low rates generating the refinance boom of
the late 90s and early 2000�s. Naturally, interest rates began to rise
and the flies swarmed towards adjustable rate mortgages in hopes of
getting the lowest rate possible. Finally, the choice of monthly
payments applied strictly to interest and not principal became
available.
If you�ve spent anytime watching television the past few months you may
have heard about reverse mortgages. Reverse mortgages essentially payout
a homes equity in installments to the owners and are becoming very
popular amongst retirees. As the backlash of many of these
unconventional mortgages begin to take their toll, a new kind of
mortgage is slowly starting to emerge. The forty to fifty year mortgage,
I believe, will be the next big trend in home mortgages.
Rising energy costs and a general increase in the cost of living have
caused a concomitant rise in the cost of housing (not very
surprisingly). With housing costs steadily increasing it seems that the
only viable means of keeping rates low enough to qualify is by extending
the period of the loan. A forty or fifty year loan will of course have a
much higher interest rate but the monthly payments will be substantially
smaller than a comparable fifteen year of thirty year loan. At the time
of this writing, only a few mortgage brokers nation wide offer forty and
fifty year mortgages.
However, skilled and experienced lenders are downright experts when it
comes to economics and they understand perfectly well that getting
buyers into homes is crucial for the national economy or, for that
matter, the world economy. Lenders know that they need to keep the real
estate market as liquid as possible and to do this they have to make
mortgages as obtainable as possible. One of the keys to success in real
estate is the ability to predict future trends. But because very few of
us possess psychic abilities, predicting the future is not easily
accomplished.
The next great trend in real estate financing may or may not be extended
mortgages, although it certainly seems that way. It pays to be prepared
and if you are interested in capitalizing upon the next great trend then
you need to learn what�s happening in the market. One way or another,
with things being the way that they are now, something has got to give.
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