Only if there's a buy out for all my old 8-tracks I have boxed up in the basement...

This is actually one of the provisions set forth in the GSE reform bill passed over the summer. It applies to FHA loans and is part of the overall plan to refinance some problem loans in order to help stabilize the housing market.

Hey lets all stop paying our mortgages so we can get better rates. Give me a big hunk of gubberment cheese too! And, since their buying, a round for all my friends as well. Last person still foolish enough to work gets the bill.  Personal responsibilities are for suckers.

I have been saying this since the sub-prime market started to meltdown a year ago.  Although I would say extend the terms of the loan to whatever it takes to make the monthly payments affordable for the home owner even if that means terms of 80 to 100 years.

But going from 30 to 80 or 100 years might, and is at least worth looking into for the banks, especially the ones that are having a hard time raising capital to remain solvent.  Something coming in from the mortgages is better than nothing.

Did I forget the smiley again. Darn.

Actually, I did deposit mine.  But then increased my payments by $100 too.  So I guess I am using mine that way.

No, I did not use mine wisely.  If I had and I was being foreclosed, the government would have bailed me out!

On $100, 000.00 assuming a 5.750% interest rate (everyone knows that the more years the higher the rate but we'll keep it the same for this example).

30 years payment is:$583.57 a month while a 40 year payment (again at the same interest rate) is $ 532.89 a month.  You save about 50 bucks (and if you realistically raise the interest percentage by .25 for the 40 year loan then the savings is only 33.26 a month). Hardly a dramatic savings.

The total cost of the 30 yr loan is $210,085.20 and the 40 yr loan costs $255,787.20.

Richard are you giving economic advice to Obama?

That's where I got my figures from.

Well seeing as banks are so unwilling to lend now, while there is also an oversupply of homes, basically meaning house prices are sent crashing (increase supply, decrease demand = lower prices), renting might be a possibility - that is, instead of just forcing someone out of their home and flogging it for next to nothing, just take over the home+charge them the market rent. If they can't afford it, they'll have to go and rent from somewhere else. Fewer homes get sold, you bypass the problem of people not being able to get another house due to loans, and hopefully you might be able to spread out some of the damage so it's less severe (but for a slightly longer period of time). The problem of course is that banks (or the government if they've taken over the bank in question) aren't in the rental business, so might not be able to do it as well. On the other hand, if 'buy-to-let'ers can't obtain the finance to purchase super-cheap homes to then rent out because of the financial crisis, the government/banks might be the only option for it. In time prices would then recover, and the houses could be sold gradually rather than flooding the market all at once.

As to extending the mortgages, not a good idea. Not only because of the diminishing effect on repayment reductions as already pointed out, but also because of peoples working age - if you have an 80 year mortgage, you're going to reach retirement age and still have a massive amount outstanding. If you couldn't pay it off when in the 'prime of your life' at 30 (and hence needed the extension), how can you hope to meet the repayments when you're retired (or unable to work as much due to old age)? That's before even factoring in the problem that banks might need you to take out life insurance to cover them in the event you croak it after 50 years and leave much of the loan oustanding.

And that is before the house is bought.

No, and it does not have to be 0% down.  Except in the mind of some.