Reply #3: The banks get closing costs and a fee for servicing the mortgage

[Warpy]

but if they weren't able to sell that mortgage to Fannie Mae or Freddie Mac, you can bet there would be a lot fewer mortgages issued and the interest rate would be a lot higher.

The reason you're paying so much in interest is the length of the loan. Crunch the numbers for a 30 year mortgage vs. a 15 year mortgage and you'll see what I mean.

The 30 year mortgage is still the biggest bargain out there when you consider some of the alternatives like the balloon mortgages and the constantly resetting ARMs...or just paying rent and not building equity, at all.

Home ownership is a PIA, but that 30 year mortgage can be a great hedge against rising rents, even with constantly rising property taxes. I bought my place in 1996 and by 2000, rent on an apartment half the size was more expensive than my mortgage.