LaDon Mortgage offers 40-year mortgage

LaDon began offering the 40-year mortgages July 1, said Darren Hoelcher, marketing director for the company.

“Families are growing and growing,” Hoelcher said. “Because the house prices are going up drastically … and the income’s going up a little bit, we need to be able to offer these families a house that fits them at a decent monthly price.”

In November 2004, the National Association of Realtors announced that Springfield posted the third-highest increase in median resale home prices in the Midwest for the third quarter of the year. Springfield’s median resale home price for the third quarter of 2004 was $110,200, a 12.6 percent jump compared to the third quarter of 2003.

While the mortgage company looks at the same credit issues as it would for shorter-term loans, and the 40-year loans can be used for new purchases or refinancing, there are some differences. For one, Hoelcher said, the purchase price has to be more than $50,000. Another difference is that the interest is slightly higher, usually an eighth to a quarter of a percentage point.

“It’s not a drastic difference (and) the 40-year is at a fixed rate,” he said. “What we like to do with it is to see people get out of credit card debt.”

LaDon Mortgage works with multiple lenders, Hoelcher said.

Forty-year mortgages aren’t yet prevalent in the Springfield market, but that might change soon, said Aaron Jernigan, president of mortgage banking with The Signature Bank.

Jernigan said The Signature Bank eventually will offer 40-year mortgages, but there’s no set timeline. When that will happen depends on when investors in the secondary market will buy 40-year mortgages.

“We don’t have any investors now that will take them,” Jernigan said. “But it is coming. I have spoken to the investors that we work with, and they say that they are going to allow us to do them.”

The majority of The Signature Bank’s mortgages are sold in the secondary market; Jernigan said only a few are retained in-house.

The 40-year loan option also boosts business for local Realtors.

Leah Kutzner, a Realtor with Carol Jones, Realtors, said she sends all of her clients to LaDon Mortgage, partly due to the appeal of the 40-year mortgage. Her clients, she said, benefit in more ways than one.

“People who could normally spend $100,000, stretching it out over 30 years, can probably spend maybe $120,000 if they can stretch it out over 40 years,” she added. “It helps everybody, because (also) if they can only spend a certain amount of money per month, and they need a bigger house, then they can spend more with a 40-year loan.”

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