Soaring housing prices are convincing some homebuyers to take on 40-year mortgage loans, which can reduce monthly housing payments but increase the amount of interest paid.

Heather MacKenzie, a broker who owns Orem-based Ideal Home Loans and also a residential mortgage regulatory commissioner with the Utah Division of Real Estate, said lenders are once again promoting 40-year mortgage products, which have been around for a number of years.

MacKenzie estimates that about 15 percent of her loans this month will be 40-year mortgages.

"I would say the public doesn't know too much about them," MacKenzie said. "They know more about 30-year and interest-only loans. The lenders are just starting to get it out where they are available."

A 40-year mortgage appeals to some homebuyers as an alternative to popular interest-only loans. It allows buyers to keep monthly payments low while also paying down principal, according to Pierre Alley, a loan officer with Salt Lake-based Western Fidelity Mortgage.

Aaron Earnest, co-owner of Investment Lending Inc. in Orem, pushes niche mortgage products. About 10 percent of the company's business is made up of 40-year option adjustable-rate mortgages. The 40-year option ARM lowers a homebuyer's monthly payment even further through negative amortization.

Earnest, 34, closed last week on an $855,000 house located in the Provo Riverbottoms. He financed the home using a 40-year option ARM. His monthly payments will be roughly $2,300, not including taxes and insurance.

"My wife is very excited," Earnest said. "Of all of the loan choices that exist, the one that most perfectly meets our objective — which is to give as little to the bank as possible — is this 40-year option ARM."

Under a traditional 30-year fixed mortgage at 6.5 percent, Earnest's monthly payments would have been roughly $5,404. The money saved, he said, will be put toward personal investments that include property, municipal bonds and hard-money lending.

While a 40-year mortgage works for Earnest, he is quick to acknowledge that the product is not an excuse to "go live the high life."

"We discourage anyone getting into this type of a program if they wouldn't otherwise qualify for the equivalent 30-year fixed mortgage," Earnest said. "If somebody doesn't qualify for this, we'll get them into the best interest-only scenario until their application is strong enough to get one of these option ARMs."

Alley believes 40-year fixed-rate mortgages are not the right choice for most homebuyers.

"There's a couple of drawbacks in my opinion," Alley said. "The interest rates that you are going to pay for that program are typically higher than just your straight 30-year mortgage. So you're paying a slight premium right now for that 40-year mortgage. I've seen it as high as 3/8 to 1/2 percent above a straight 30-year fixed. That takes away some of those benefits of extending the term of the loan."