30 Year Mortgages - A Thing of the Past?

While no official statements have been released yet, there has been a lot of buzz that the federal government is thinking of doing away with its affordable home ownership programs, such as Fannie Mae and Freddie Mac. The “buzz” is based largely on the fact that neither of the organizations is taking in as much money as it did in years past and there has been mention of getting rid of these companies. If that does happen, however, industry experts predict that the change would likely be gradual, with a slow phasing out of the organizations as opposed to just instant and immediate shutdown.

Insiders have explained that the 30 year fixed-rate mortgages offered by the programs are a big part of the problem. New regulations on capital reserves and mortgage securitization have caused banks and the government to lose out on these loans, which is probably, insiders says, a big part of why Fannie Mae and Freddie Mac will be gone within three years or so.

Of course, these aren’t the only organizations to offer 30 year mortgages, but the number of  

companies and banks that do is dwindling. Most financial establishments only want to offer five or ten year terms. But paying for a whole home in a decade or less is out of reach for many Americans, and the trend toward shorter and pricier mortgages will leave many would-be-homeowners out in the cold.

While no one can predict the future- indeed, thirty year mortgages might be around for a very long time to come- it’s always best to be prepared no matter what. If you need a thirty year mortgage, now may be the time to get one. Or, you can simply start planning and investing smart now so that, no matter what happens, a home will always be an option for you.

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• The End of 30-Year Fixed Rate Mortgages? (armstrongeconomics.com)