Could the 30-year Mortgage be going away?

Lately the federal government has been reconsidering their involvement in the home mortgage practice. Although they plan to still assure certain mortgages, they seem to be redefining what they might consider a ‘qualified’ borrower. Here they are looking at stricter lending guidelines in these areas:  Type of mortgages; minimum down payment requirements; debt ratios; and FICO scores

There seems to have been conversations about do away with the 30 year fixed rate mortgage which has been a indispensable to this country’s housing industry for a long time. Some in government want to duplicate the mortgage process of other countries.

For example in Canada, they don’t even have 30 year fix mortgage rate. Instead the vast majority of Canadian home loans have a 25 year payout, but the interest rates are renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you decide you want a fixed rate mortgage for 25 years, you must pay two percentage points higher than the going rate at the time of your closing.

Could the same happen in our country?  Only time will tell as congress processes the role of the federal government in the mortgage business.

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