Just as the California housing marketing is tanking, smart guys are inventing the 40-year fixed-rate mortgage. Yes, you can always extend the length of the mortgage to make an expensive house affordable to a few more folks.

Some buyers in high-cost housing markets in the Northeast or on the West Coast have turned to 40-year fixed-rate mortgages in the pursuit of homeownership. Haven't heard of a 40-year fixed mortgage? You may soon. Fannie Mae is engaged in a pilot program with select credit unions that could eventually make the product more widely available if Fannie considers adding this product to its portfolio.

The primary advantage of a 40-year fixed-rate mortgage is making monthly payments more affordable without taking on the risk of an adjustable rate. In addition to buyers in high-cost areas, the 40-year fixed mortgage also appeals to buyers with small down payments. Reducing the monthly payments on large loan amounts is accomplished by stretching the repayment term by an extra 10 years.

But the difference in payments may not be as significant as you might think. Consider that a $200,000 mortgage financed for 30 years at a fixed rate of 5.75% carries a monthly payment of $1,167.15. All else being equal, stretching the loan term an additional 10 years reduces the monthly payment by just over $100 to $1,065.78.