On $100, 000.00 assuming a 5.750% interest rate (everyone knows that the more years the higher the rate but we'll keep it the same for this example).

30 years payment is:$583.57 a month while a 40 year payment (again at the same interest rate) is $ 532.89 a month.  You save about 50 bucks (and if you realistically raise the interest percentage by .25 for the 40 year loan then the savings is only 33.26 a month). Hardly a dramatic savings.

The total cost of the 30 yr loan is $210,085.20 and the 40 yr loan costs $255,787.20.

Richard are you giving economic advice to Obama?

Yes you do save a ton in interest, but your monthly payments do not change much.  And that is the problem, not how much interest they pay, but how much they pay each month.  The car load is not valid.  You are going from 36 months to 60, a 67% change and most of the payments are principal, not interest. A 30-40 year change is only half that, and most of the payments are interest, so you are not reducing your interest paments until year 18 or so (on the 30).

There are calculators on the internet.  Check it out: 30yr, 6.5%, 250,000 - payments $1580

40yr, 6.5% (it would be higher because of the longer term, but let's keep it the same), 250,000 = 1463.

Simple math.

That's where I got my figures from.

Yea, Sorry about that.  I pulled up this article to comment, got distracted and then finished it.  And after it posted, saw you had already done the math.  Did not mean to duplicate you.

Well seeing as banks are so unwilling to lend now, while there is also an oversupply of homes, basically meaning house prices are sent crashing (increase supply, decrease demand = lower prices), renting might be a possibility - that is, instead of just forcing someone out of their home and flogging it for next to nothing, just take over the home+charge them the market rent. If they can't afford it, they'll have to go and rent from somewhere else. Fewer homes get sold, you bypass the problem of people not being able to get another house due to loans, and hopefully you might be able to spread out some of the damage so it's less severe (but for a slightly longer period of time). The problem of course is that banks (or the government if they've taken over the bank in question) aren't in the rental business, so might not be able to do it as well. On the other hand, if 'buy-to-let'ers can't obtain the finance to purchase super-cheap homes to then rent out because of the financial crisis, the government/banks might be the only option for it. In time prices would then recover, and the houses could be sold gradually rather than flooding the market all at once.

As to extending the mortgages, not a good idea. Not only because of the diminishing effect on repayment reductions as already pointed out, but also because of peoples working age - if you have an 80 year mortgage, you're going to reach retirement age and still have a massive amount outstanding. If you couldn't pay it off when in the 'prime of your life' at 30 (and hence needed the extension), how can you hope to meet the repayments when you're retired (or unable to work as much due to old age)? That's before even factoring in the problem that banks might need you to take out life insurance to cover them in the event you croak it after 50 years and leave much of the loan oustanding.

And that is before the house is bought.

No, and it does not have to be 0% down.  Except in the mind of some.

if you extend a morgate to INFINITE years (aka, they only pay interest) the payments are gonna be only SLIGHTLY lower then a 30 year mortgate... on the first 25 years or so most of the amount you pay monthly is just the interest.

Only thing to do is refinancing where they just give people breaks.. (ok, we are gonna take 20% off of what you owe us and reduce your interest by 2 points... just don't declare bankrupcy cause then you loose everything, and we don't get a cent back) 

Yes, look at what the interest is on the first year payments.  That is as low as it goes regardless of the years.

If you can find one, that is a real sweet heart of a deal.  But the seller (other than the one I read about in Texas) is not going to be altruistic.  Usually that costs more, and the only reason it is good is because the buyer does not have a down payment.