Owning home during the last three years has been like fall into a gold mine. Values have just gone up, up and away.

If you are a homeowner you just can't stop smiling. The size of your home's equity may be matched only by the latest Power Ball total. But what about the first time home buyer or those who have a burning need for more space - the move up buyer?

Wages gains have not matched the increased real estate prices and that is putting new buyers in a tight spot. The law of market forces indicates that with fewer people able to buy a home there will be less demand and home prices will begin coming down, right? Wrong!

The building industry and booming home equity growth are about the only things driving the fragile U.S. economy. The government must keep the housing market healthy or risk being booted out of office. Bush is keeping the ball rolling just as Clinton did before him. Keep the voters passive in their snug new homes.

Enter the 40 year mortgage.

An ad in the financial section of a major city's newspaper shouts "Ask About Our 40 Year SmartChoice Mortgage!" The advertisement goes on to say you have your choice of an adjustable rate of 1%, or a fixed rate of 1.75% for 5 years.

Look what that means. You can stroll in and borrow $400,000 for a monthly payment of just $1,012 with zero closing costs! Hurray, everyone can again afford to buy a home. Yeow, this ad even says they will loan you 107% of your new home's value.

Shouldn't we get a little nervous when we see that kind of ad? Won't the 40 year loan allow people who really can't afford a home to shoulder that financial burden? And if we may be a real estate bubble as some claim, doesn't this make buying highly leveraged real estate down right dangerous?

Until now forty-year mortgages have been rare because lenders couldn't sell the darn things to investors through the government-sponsored enterprises Fannie Mae and Freddie Mac. Those 40 year loans had to be held by the lenders, tying up their money for a long time. Now that's changed.

Both Fannie and Freddie are passing out cash for those babies like they are running their own money printing presses. Wait a minute, the government IS running the presses. Some would say, just like Parker Brothers prints Monopoly money.

It's easy to see that the primary advantage of a 40-year fixed-rate mortgage is to make monthly loan payments more affordable and avoid the risk of an adjustable rate mortgage. The 40-year fixed rate also appeals to buyers with small down payments.

Now stop and look at the numbers. You will see that the difference in payments may not be that significant. Take a $200,000 mortgage financed for 30 years at a fixed rate of 5.75%. It would have a monthly payment of $1,167.15. Stretching the loan term by an additional 10 years (40-year mortgage) only reduces the monthly payment by a little over $100 to $1,065.78.

There's more: Some of benefit of those lower monthly payments is offset by the higher interest rate that comes with the 40-year loan. Rates on a 40-year fixed are often one quarter to one half of a percentage point higher than a traditional 30-year fixed-rate mortgage. Loans with longer terms carry higher rates because of the added time frame where a default may occur and because lenders require compensation when their money is locked up for the longer time.

One of the benefits of the recent increase in homes values is that homeowners turned much of their equity into cash through refinancing. Homeowners spend that cash and that money keeps our economy going. With 40-year loans real estate equity grows at a snail's pace a home's value appreciates at a normal rate of 3% to 5% yearly. For the first-time home buyer who plans to eventually move up to a larger home, this slow pace of equity accumulation is a liability.

Now add zero closing costs to the mix. In most areas, closing would run about $2,000 in fees to refinance a $200,000 mortgage. Appraisal - $300. Settlement Fee - $300. County recording fees - $400. Underwriting fee - $300. Processing fee - $200. Title Insurance - $750. The list goes on.

Without zero closing cost programs, the home buyer would have to wait until interest rates reached a level low enough to justify the closing costs. Remember that closing costs must be low enough to allow the buyer will recoup those costs in a reasonable period of time. If he plans on being in the home for five years and it takes seven years to recapture the closing costs it's a bad deal. We must admit homeowners don't see to be very concerned about such things.

No body gets something for nothing, especially with mortgage lenders. A zero cost loan program is financed by a loan with a slightly higher interest rate. You can juggle the numbers all you want, but the borrower always pays and the lender always earns.

The 40-year mortgage will allow our economy to keep rumbling along this bumpy road for at least a short trip. Let's hope we don't wind up at a dead end.