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Is the 50-Year Mortgage the New Home Loan You've Been Looking For?
by Gil Mackey
CMR Columnist
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For would-be California homeowners, the options may look limited. The price of homes is high, mortgage rates have gone up in the past few years, and many prospective homebuyers don't have money saved for a down payment. This doesn't mean you're completely without options.
The 50-Year Mortgage
A number of homeowners in California have already taken advantage of longer loan terms. According to a report released last year, 5% of all home loans have 40-year terms. What advantage does this offer for those looking for a new home loan? It's an alternative to creative interest loans such as the 5/1 adjustable rate mortgage (ARM) and interest only mortgages. With those home loans the homeowner can often find themselves in trouble rather quickly. Without a plan for paying down the principal when the introductory period is over, the wrong mortgage can leave a homeowner facing the possibility of foreclosure.
The 50-year mortgage provides a great solution to those looking for a new home loan with payments they can actually afford. It is a variation on the ARM with the payments stretched out over 50, instead of the traditional 30 years. While this means it may take much longer to build up equity, it does give you lower payments. If your income increases you can always explore the possibility of a mortgage refinance. In the meantime you have mortgage payments you can afford.
Research Your Mortgage Options
As you explore your new home loan options, use a mortgage payment calculator to make comparisons between loan terms. A mortgage payment calculator lets you see just how much you might owe each month with a 30-year, 40-year, or 50-year mortgage. Look at the amortization schedule to compare how long it takes you to build up equity with each mortgage. Using a mortgage payment calculator can help you in your decision-making process, but if you still have questions talk with a mortgage lender.
Source:
CNNMoney
About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelance writing, he writes for his local paper, and lives with his two children in Nevada.
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