By Jerry Kronenberg
Today's record-low interest rates have lots of homeowners debating whether to refinance into 15- or 30-year mortgages, but few realize lenders offer products with all sorts of repayment periods -- from five-year "balloon" mortgages to 29-year loans.
This simple stock screen turns up names that will please a deep value investor.
"They're not standard offerings, but they are widely available in the marketplace -- particularly for consumers who are willing to shop around," says Greg McBride of market tracker Bankrate.com.
Fifteen- and 30-year mortgages do make up the bulk of the market, but the Mortgage Bankers Association says some 15% of consumers who refinanced in May chose nonstandard products -- generally 10- or 20-year loans. About 2% of May homebuyers also chose such loans for purchase mortgages.
Quicken Loans offers one of the best-known home loans with nonstandard repayment terms -- a heavily advertised product called the "Yourgage."
The Yourgage lets consumers choose anything from eight-year loans to 29-year ones.
"It wasn't that clients were calling us and saying, 'Hey, can you do a 26-year loan?'" Quicken Loans' Bob Walters says. "But we found a lot of people who'd say: 'I got a 5% mortgage rate three years ago and I'd love to refinance to 4.25%, but I don't want to add a new three years to my loan."
Walters says eight-year mortgages are the most popular choice among Yourgage customers, with 29-year loans coming in second.
"You've got two ends of the spectrum," he says. "People who take out eight-year loans have typically been in their current mortgage for a few years and want to pay it off quickly. What we tell people about 29-year loans is that they can pay an extra 50 cents a day on a $200,000 loan, pay it off one year earlier than they would with a 30-year mortgage and shave $6,000 to $7,000 of interest off."
Read the rest of this story at TheStreet.com.
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By Jerry Kronenberg