Long Term Home Loans Put California Houses Back Into Reach

by Joe Taylor Jr.
CMR Columnist

Mortgage lenders have found a new way to make Californias high-priced housing market affordable: 50-year home loans. With interest rates rising and housing costs pricing most people out of the market, 50-year loans are giving people in California a way to get into a home.

California mortgage lenders say that they are already receiving a lot of interest in 50-year home loans. The loans work just like a standard 30-year mortgage, allowing homeowners to stretch out payments over half a century with the same mortgage rates. Extending the loans to 50 years lowers the monthly mortgage payment and provides the security of fixed interest rates.

Safer Long-Term Home Loans

Californias housing market hit astronomical prices in recent years, with the median home price reaching more than $500,000 in late 2005. According to the California Association of Realtors, that meant only 14% of California homebuyers could afford to buy a house with the standard 20% down payment. Many turned to potentially dangerous interest-only loans and payment-optional adjustable rate mortgages.

Financial analysts say that while 50-year home loans mean that youll pay more interest over the life of the loan, the lower monthly payment can help you afford a house in California. Mortgage rates are steadily climbing, and spreading payments out over five decades can result in a payment you can make.

Low Home Loan Payments Without the Risk of Adjustable Interest Rates

High housing costs sparked the popularity of interest-only and negatively amortizing loans. These financial options offer low payments up front that increase as the loans' adjustable interest rates goes up. More and more homeowners are panicking now as their mortgage payments are increasing, sometimes beyond what they can pay. Fifty-year loans provide a long-term, financially stable solution.

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About the Author
Joe Taylor Jr. coaches musicians, entrepreneurs, and other adults that want to shift their careers. He holds a Bachelor of Science in Communications from Ithaca College.

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