Home Buyers Not Drawn to New 40-Year Mortgages

Vermont is one of at least a dozen states that now offer 40-year mortgages, but only a small number of home buyers have applied for the loans being offered by several lenders statewide.

According to Chittenden Bank mortgage sales coordinator Kellie Stoll, "I think the intent was that it would help people qualify for a higher mortgage, but we haven't seen that."

The fact that buyers pay about 0.25 percent to 0.38 percent more in interest for 10 additional years is one of the reasons why TD Banknorth President Philip Daniels says his company is not offering a 40-year product at the present time.

However, John Hood of the New England Federal Credit Union, which began offering the option almost one year ago, says borrowers tend to focus on monthly payments--not total interest--because they generally refinance or sell within eight years.

--Burlington Free Press, Dan McLean (8/8/06)