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.

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!)