In the real estate industry there is always some kind of trend taking place that investors and even home buyers are quick to take advantage of. In the late '90's and early 2000's the refinance boom was all of the rage. It seemed that loans were freely given away at historically low rates. Then as interest rates started to climb, adjustable rate mortgages became all of the rage and everyone and their brother had to get the lowest rate possible. Not long after came the interest only loans where monthly payments were only applied to interest and not to the principal.
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 great 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 appears 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 understand that they need to keep the real estate market as liquid as possible and to do this they need 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 looks 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.
