2007-06-27 11:02:57 · 6 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Yes, you pay off the mortgage in 40 years. The payment is a little lower than 30 yrs but the interest rate is slightly higher than the 30 yrs. I wouldn't recommend 40 years, you end up paying more in interest for a longer period and you probably die before you pay off the house. You are better off renting.
2007-06-27 11:10:26 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It's a great idea if you want to purchase you a home. If this is the objective then this is a vehicle to get you to where you want to go. You will pay a lower monthly payment thus if you earn less than the 30 year qualification route then you could qualify at the 40 year route.
The mortgage works the same as the 30 year mortgage except you have an additonal years in which to pay it off.
When the number of years went up from 10-20 I am sure there were people that said Oh my God 20 years you will never pay off this mortgage. The same thing probably happened when the 30 year mark was accepted. Things evolve and change.
When we only had a fixed rate product, everyone got the same loan. Some one came up with the adjustable rate loan. All the old timers threw their hands in the air and said I would never get one of those nor will I get one for my clients.
Now adjustable rates are as common as the 10-15-20-30-40 year fixed product. There will be other changes to, just look at your position, why it is this a good or bad idea for you and make the correct decision based on the information you have.
You have to remember this is a amortization, you may add payments to your monthly payments thus paying your mortgage off earlier.
Houses cost more now, in order for more people to qualify the lending industry has raised the number of years to 40 to pay of the mortgage, eventually we will have the 50 year amortized loans. Watch the hands go up then and eyes rolling toward the sky.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2007-06-27 18:34:42 · answer #2 · answered by loanmasterone 7 · 0⤊ 0⤋
Yes a 40 year mortgage is becoming a more poplular loan option. The monthly payment on a 40 year loan would be cheaper than a traditional 30 year mortgage because the payment would be stretched out over a longer period of time. In some cases though interest rates are going to be higher on a 40 year loan than a 30 year mortgage, so it may offset the savings by streching the loan out longer because the interest rate is higher. A 40 year loan is a principal and interest loan, so you will be reducing the principal balance on the loan as you pay on the mortgage each month. This is a better option to consider over an interest only loan where there is no principal reduction.
2007-06-27 18:41:33 · answer #3 · answered by mateomortgage.com 2 · 0⤊ 1⤋
A 40-year mortgage makes a mortgage loan more affordable by reducing the mortgage payment. However, adding a certain amount to your monthly payment for a 30-year loan would accomplish the same thing, maybe better.
The longer you extend the term whether it is from 10 to 20 or 20 to 30 or 30 to 40, the monthly payment reduces in smaller increments. Therefore, when you are going from a 30 to a 40 there aren't significant savings. Also, If interest rates go up, doing a 40 year term weakens even more.
2007-06-27 18:25:56 · answer #4 · answered by MORTGAGE 101 1 · 0⤊ 1⤋
Yes there is such a thing...you would pay lower monthly payments, but extra on the interest b/c it's beening lent out for a longer period of time.
2007-06-27 18:08:04 · answer #5 · answered by Elie0423 2 · 0⤊ 0⤋
Don't do it...You'll end up paying an extra $100k for a $350k loan.
2007-06-27 18:10:26 · answer #6 · answered by Anonymous · 0⤊ 1⤋