Jan deRoos, a recently divorced father who teaches real estate at Cornell University, was set on living in the Fall Creek neighborhood of Ithaca, N.Y. When he couldn't swing his dream home with a traditional mortgage, deRoos chose a 40-year loan with lower payments.

Fannie Mae is test-marketing the extra-long loans through 22 credit unions nationwide. Washington Mutual and other major lenders offer them, too.

For buyers on the margin, adding an extra decade to a conventional 30-year mortgage can mean the difference between affordable and out-of-reach. But the savings are minimal.

For starters, you'll pay a higher rate to stretch out payments. A $200,000, 40-year loan at 6% will save you just $64 per month compared with a 30-year fixed-rate loan at 5.73%. And the longer loan will cost an additional $109,000 in interest over its full term. Such loans "provide relief for some borrowers, but they're not a necessity for most people," says Keith Gumbinger of mortgage-tracker HSH Associates.

Homebuyers who want to hold down monthly payments may prefer a loan that's paid off at a 40-year rate until a balloon payment comes due, say, in five years. With a lower rate of 4.5%, you'd pay $899 a month on a $200,000 loan, about $200 less than the full-term 40-year mortgage. The downside: You can't predict what rates will be when you have to refinance. And you may have little or no equity if you move soon after buying the house. --Joan Goldwasser

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