Quote:
Originally Posted by I_H8_Crawford
All this will do is accelerate the crash now... taking even more buyers off the market.
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Yup, it will cause the crash, if we are set up for one, to happen earlier. It keeps the bubble from getting bigger though and having an even bigger crash further down the road. Smart move in my opinion. A smarter move would have been to correct this earlier or never allow 0 down mortgages.
Quote:
Originally Posted by photon
Why is a 40 year mortgage inherently bad? Other countries that have centres with much higher prices have had 40 and 50 year mortgages for a while now.
What's magical about 25 years?
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40 years isn't really the problem. It's the zero down. 35 years are still allowed, and the difference in monthly payment between a 35 and 40 year mortgage is less than $100 unless you are buying something really extravegant. 40 years does allow you to qualify for something with a higher price tag though, which introduces more risk. Zero down is just foolish. If prices drop even a bit within the first few years of your mortgage and you need to sell, hello negative equity situation, hello USA.