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By BILL LUBINGER

NEWHOUSE NEWS SERVICE

When you have the ability to repay a loan sooner than it’s due, should you? And can you, without penalty?

The answer varies according to the loan type and your circumstances. Here’s some insight from Greg McBride, senior financial analyst at Bankrate.com:

• Mortgage: Yes, a home loan can be repaid ahead of its term, and there are many ways to do so. You can pay more each month, with the extra money applied toward the principal. Or you can make lump-sum payments any time, but be sure to designate that the money is to go toward the principal.

Should you? Not necessarily. Mortgages are usually a debt with the lowest interest rates, plus homeowners get tax breaks on the interest.

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Tags: mortgages, loans

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By EILEEN ALT POWELL
Associated Press

NEW YORK - When it comes to home mortgages, some people are thinking really long term by taking 40-year or 45-year - or even 50-year - loans.

The attraction is lower monthly payments, which make these mortgages more manageable for some families. The disadvantage is that consumers can end up paying much more interest during the life of the loan than they would with a traditional 30-year mortgage.

Only a handful of lenders currently are writing 40- to 50-year mortgages, but experts believe others will follow if they prove popular with home buyers.

Among the consumers looking at a 50-year mortgage is Larisa Meyer, 35, who is buying a 100-year-old home in Minneapolis.

Meyer, a self-employed graphic artist, said it’s important to her to keep her monthly mortgage payment low because her income can be irregular. At the same time, she doesn’t want an exotic mortgage, such as an interest-only loan, because she wants to build equity in her new home.

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Touted as an option for high-priced housing markets, it has yet to catch on

By Gayle B. Ronan

MSNBC contributor
Updated: 7:44 p.m. ET June 7, 2006

“It feels like a solution in search of a problem,” says Pete Bonnikson, vice president of mortgage operations for E-LOAN, describing the latest product to hit the home mortgage market: The 50-year mortgage.

Reportedly the problem this hyperextended loan addresses is affordability for homebuyers in high-cost areas. By stretching the repayment calculation over 50 years, so the argument goes, monthly payments fall by enough that borrowers unable to qualify for any of the other dozens of mortgage options can get a loan.

For certified financial planners like Nancy Flint-Budde in Salem, N.Y., it is a tossup as to whether helping people get around a standard option meant to keep them from overextending themselves is a good thing. “If they can not qualify for a standard or interest-only mortgage, this seems like a dangerous strategy,” she says.

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Perspective: Wherewithal to own is more important than ability to buy

Thursday, June 08, 2006

By Marcie Geffner

Is it ethical for real estate and mortgage brokers to ignore the inherent risks of so-called exotic mortgages in order to help more people buy their own homes? The answer, arguably, is no.

Granted, higher house prices and mortgage interest rates have made home-buying much more difficult in recent years, and it would have been impossible for many new homeowners to have bought a home without some of the more creative loan products that are now available. It’s no surprise that these mortgages have become quite popular, even though borrowers who can’t manage to make the higher payments in later years face a financial crisis and potential loss of their home.

Two examples of these newer, nontraditional mortgages are interest-only and payment-option loans. An interest-only mortgage defers payment of any principal for an initial term after which the monthly payment is adjusted to amortize the loan over the remaining term. A payment-option mortgage allows the borrower to select a from among a number of monthly payments some of which may result in negative amortization.

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BY EILEEN ALT POWELL
AP Business Writer

This story ran on nwitimes.com on Sunday, June 4, 2006 12:07 AM CDT

NEW YORK | When it comes to home mortgages, some people are thinking really long term by taking 40-year or 45-year — or even 50-year — loans.

The attraction is lower monthly payments, which make these mortgages more manageable for some families. The disadvantage is that consumers can end up paying much more interest over the life of the loan than they would with a traditional 30-year mortgage.

Only a handful of lenders currently are writing 40- to 50-year mortgages, but experts believe others will follow if they prove popular with home buyers.

Among the consumers looking at a 50-year mortgage is Larisa Meyer, 35, who is buying a 100-year-old home in Minneapolis.

Meyer, a self-employed graphic artist, said it’s important to her to keep her monthly mortgage payment low because her income can be irregular. At the same time, she doesn’t want an exotic mortgage, such as an interest-only loan, because she wants to build equity in her new home.

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By Jeff Brown

Sunday, June 4, 2006

With interest rates rising, fewer people are applying for new mortgages — just as you’d expect.

But here’s a worrisome surprise: More of the applicants are seeking adjustable-rate mortgages that could saddle them with bigger monthly payments if rates keep going up.

Clearly, many borrowers are using adjustable loans, or ARMs, to borrow more than they could with fixed ones. That means they may be taking on more debt than they should.

And I suspect some are placing a risky bet that rates will fall in a year or two, reducing monthly payments on ARMs taken out today. Given past patterns, however, it could be several years before rates fall substantially below where they are today, and they could rise in the meantime.

Today’s ARMs are a bad deal. If you’re shopping for a mortgage, the standard 30-year, fixed-rate type is almost certainly your best bet. It charges the same rate for its entire term — up to 30 years.

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EILEEN ALT POWELL

Associated Press

NEW YORK - When it comes to home mortgages, some people are thinking really long term by taking 40-year or 45-year - or even 50-year - loans.

The attraction is lower monthly payments, which make these mortgages more manageable for some families. The disadvantage is that consumers can end up paying much more interest over the life of the loan than they would with a traditional 30-year mortgage.

Only a handful of lenders currently are writing 40- to 50-year mortgages, but experts believe others will follow if they prove popular with home buyers.

Among the consumers looking at a 50-year mortgage is Larisa Meyer, 35, who is buying a 100-year-old home in Minneapolis.

Meyer, a self-employed graphic artist, said it’s important to her to keep her monthly mortgage payment low because her income can be irregular. At the same time, she doesn’t want an exotic mortgage, such as an interest-only loan, because she wants to build equity in her new home.

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