Don’t worry too much about the affect of a 50 year loan. On a 200k loan the monthly savings in going from a 15 to a 30 is $431, from a 30 to a 40 is only $94 (If you borrow 600k it is amost 300 a month). From a 40 to a 50 is almost nothing because the interest rate is higher. Yes 25% of new loans in California are 40 yr loans according to Bankrate but the benefits of lengthening a loan diminish as it gets longer. If a buyer was that tight and needed a fifty to qualify, then last weeks interest rate rise just knocked them out. If it hits 7% it will have dissqualified the people that need the 40 yr as well.
The following article goes into depth about the 50 yr mortgage and why it isn’t much cheaper. Also, higher rates tighten the differences. The blog at the bottom of the article is priceless, some guy posted in March of 07 that it is perfect for him because he plans to flip a house, talk about late to the party, pick up one of those new 8-tracks on the way to the bank, too.
