Best 40 Year Mortgage

40 Year Mortgage Loans

If you are a homeowner who is seeking for a way to make your mortgage payments affordable, then considering a 40 year mortgage may be exactly what you should be doing.  The 40 year mortgage loan will be able to decrease your monthly payments and since interest rates are on the rise, there are many lenders who are providing these types of mortgages. The reason that they offer this kind of promotion is in attempt to attract customers, as well as making owning a home much more possible.

People who utilize these types of loans do so in order to lower their payments and to qualify for a house, which they normally would not have been able to purchase.  However, there are some down sides of the 40 year mortgage loan.  Mortgages that are long-term are more difficult to find than a typical 15 or 30 year mortgage. This means you might have to go to a national mortgage bank or lender. Most local banks in your area will not want to take the chances.

The majority of people want to stay in their homes for many years and if this is the case with you, 40 year mortgages will be more costly in the future. These loans are a great method for purchasing a home that is high priced; however, it must be kept in mind that there are some extra costs that should be considered.

The advantage of  40 year mortgages is that you are able to find 40 year mortgage rates which are fixed. This allows all homeowners to have payments at a fixed rate and enables them to extend their mortgage. For as long as the house is occupied and the money is not needed, there is no need to worry about the equity building up. You as a home buyer will be able to get a house for which you may not be able to qualify on your own.

Keep in mind that a lot of homeowners only live in a house for an average of seven years. This means that if you want to move in for about five years or so, then you may want to look at a five year hybrid on a 40 year fixed rate mortgage. This allows you to have a fixed interest rate for the first five years. When considering a 40 year home mortgage, make sure you consider all the pros and cons. This will lead you to a sound decision and you will finally have your dream home.

The 40 Year Mortgage Loan Move

You’re ready to buy your first home. Or you’re thinking about moving up to a new residence. It’s time to shop for a mortgage loan. You’ve read about the 40 year mortgage loan. Now you’re wondering if this product is the right one for you.

Like all mortgage products, the 40 year mortgage loan is the perfect loan vehicle for many home buyers. For others, though, it doesn’t make financial sense. Here are some questions to ask yourself to determine in which camp you fit.

How important are the size of your monthly payments? How steady is your monthly income? The main benefit of a 40 year mortgage loan is that it comes with lower monthly payments. Borrowers who take out mortgage loans with 15- and 30-year terms will face higher payments each month. That’s because your home loan is spread out over a longer period of time if you go with a 40 year mortgage loan. That allows lenders to charge you a lower payment each month.

If your monthly income isn’t the steadiest, or if you worry that you’re not yet making enough dollars every 30 days to afford the house of your dreams, a mortgage with a term of 40 years might be the perfect loan vehicle for you. This loan, with its lower monthly payments, will allow you to afford that dream home that you might not otherwise have been able to purchase.

Of course, there are some negatives associated with 40 year mortgages, too. The biggest is that over the course of the loan you’ll end up paying for more than you will if you take out a 30 year mortgage or 15 year mortgage loan. That’s because you’ll be paying far more interest. You might be surprised at how much of every mortgage payment you make is devoted to paying off the interest on your mortgage loan. You’ll be paying far more interest on a loan that’s stretched out over a period of four decades.

You’ll also find that a smaller number of mortgage lenders today are willing to give out 40 year mortgage loans. Mortgage products with 30-year and 15-year terms are the industry standard. These loans are viewed as less risky because mortgage lenders are receiving larger payments each month. This way, they’ll get more money even if borrowers eventually default or foreclosure on their mortgage loans. With a 40 year mortgage, lenders are receiving far smaller payments each month. Therefore, their risk of losing more money should borrowers eventually foreclosure is far higher.

If you do determine that a 40 year mortgage is right for you, be diligent in doing your research. Make sure you study all the loan-origination fees and additional fees that your lender will charge. You don’t want the monthly savings of a mortgage loan with a 40-year term to be eaten away at by origination and processing fees that are too high.

40 Year Mortgages - The Truth!

Ok, I have something to say about 40 year mortgages.  There is so much bad press about a 40 year mortgage and 40 year mortgage rates being high.  They tell us that very little of our monthly premium is paying down the principle and so much is paying for interest for a very long time.  Some conventional lender is touting his wares by trying to convince us that 30 year mortgage rates help you pay down your balance so much more quickly.  Well, I’ve got news for you Mr. Banker.  At the moment I can’t qualify for one of your “more appealing home mortgage loans” and I would much rather pay a few dollars every month for ten of those 40 years on a home of my own than to pay a landlord $1000 a month for something I will never own.  Furthermore, I will never have a prayer of owning ANYTHING if I keep paying the mortgage for someone else.  A 40 year mortgage gives ME the opportunity to own MY own home NOW even if I don’t make enough money to qualify for a loan at 30 year mortgage rates.

Take a look at these figures and see if you don’t think a 40 year mortgage is a good thing.  I’m going to go conservative and say a house sells for $100,000.  Let’s say you can put 10% down and current mortgage rates are 6.5 %.  If you run the figures at these conventional 30 year mortgage rates you come up with mortgage monthly payments of $710.  Remember, you don’t qualify for 30 year mortgage rates.  This is hypothetically what your landlord is paying.  So you are giving him a monthly profit of $290.  This is money YOU could be putting in YOUR pocket.  Now let’s look at the loan you are able to qualify for offered by 40 year mortgage lenders.  Taking the same figures and adjusting them accordingly for 40 year mortgage rates.  We are talking about the same $100,000 home but you can realistically only put down $5,000.  (Usually you need at least 10 or 20 percent but I am assuming you can’t come up with that amount.)  Remember the interest rates are higher on a 40 year mortgage so we will go with 7%.  Now if you run the 40 year mortgage calculator you would be paying $690 a month.  That means that you will realize a difference of $310 per month below what you are paying your landlord.

Think about it!  You can own your own home and pay the electric and maybe the other utilities as well with what you are now paying your landlord to rent his home.  This is all possible because of an entity called a 40 year mortgage.  I don’t know about you, but I would rather pay a higher interest rate and a few dollars a month on the principle of my own home than to pay a thousand dollars a month to rent a home that will never be mine.  I guess Mr. Banker took his bonus we paid him with our tax dollars to figure out a way to keep the rest of us down.  I think I’ll stick with my 40 year mortgage, thank you very much.  (And btw, in a few years when I have been able to save some money I will refinance at 30 year mortgage rates.  Let’s see who’s laughing now, Mr. Banker.  I’ll be laughing all the way to the bank.  I can assure you it WON’T be yours!)