Are 40 and 50 year mortgages a sign that the real estate market is overextended?

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My salary has not gone up 20% per year. Stocks have not been going up 20% per year. There is nothing about a mortgage that magically undoes a 20% increase in payment when the loan amount goes up 20%.

Yet people keep paying outrageous prices for homes…????

4 Comments
  1. Reply
    the_myt_lubu
    May 16, 2011 at 4:38 am

    nope its just that interest rates are way too expensive. its hard to buy a house making $ 9 per hour. people get longer mortgages to get cheaper notes. but they will make up for it in interest rates. i recently brought one.,$ 84000 was the sticker price, but after taxes /financing it came out to be $ 160,000. basically im buying 2 houses.

  2. Reply
    Richard T
    May 16, 2011 at 5:27 am

    Its next to impossible to find a house for $ 80,000 in NYC. Houses will get more expensive, then the rent will go up to cover the mortgage.
    Wait till you see 100 years to finance the house.

  3. Reply
    Untamed Rose
    May 16, 2011 at 6:14 am

    Yes its a bad bad thing!
    the market is going to crash anywhere there is a 10% or more apperication. If you want a safe market look for one with 3-4 apperation that has stayed steady for years.

    it has nothing to do with interest, it’s that people people are will to pay more then a home is really worth just to live in CA or FL

  4. Reply
    dd
    May 16, 2011 at 6:20 am

    the government actually wants people to purchase homes, therefore to make it easier they offer different mortgage loans at different years, this is due to the fact of the prices of homes. For those who may find difficuly coming up with the down payment, right now there is program available, where if qualified the 20 percent can be a seperate mortgage loan, usually at a higher interest rate, for anyone who may do this, my advise is refiance asap combine the two mortgages. Speak to a mortgage broker for further details.

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