40 year mortgage payment

You ousted and the impulse to reduce your monthly mortgage payments by switching to a 50-year mortgage ...

Is it possible? Yes. But you should do it? Depends.

After a decade-long red-hot real estate market, home prices reached new highs. USA Today reported that in California, for example, "only 14 percent of people could afford a median-priced ones at home in December, when the median was $ 548,430, according to the California Association of Realtors."

Because of this pressure on the prices at home, at home buyers and lenders are now trying to cope with a new problem - the rising interest rates to cool off the market.

The traditional 30-year mortgages are now in competition on the market with their 50-year-old siblings, those with a lower monthly payment in return for 20 years of payments. There are also a number of banks offering something in between - 40-year mortgages, representing about 5% of the total mortgage market.

Such an arrangement would of course give you more purchasing power than otherwise available. Regions Bank Mortgage Loan Officer Brian Arnold, quoted in Arizona Republic story, said: "The difference in pay is not that much, but it may allow borrowers to go, that of $ 100,000 to $ 120,000 loan."

The downside is, homeowners would have to wait much longer for all equity in their property, as recently by CNNMoney.

A second problem is the adjustable speed, usually occurs after the first 5 years. This means that the borrower may be vulnerable to a sudden increase in interest for a period of up to 45 years. That is why some experts think that if you choose to stay in your house for more than 5 years, then 50-year mortgages may not be the most logical choice for you.

And what are real savings here?

According to calculations by Noelle Knox and Mindy Fetterman USA Today, "a 30-year loan of $ 300,000 at 6.5 percent, capital and interest cost $ 1,896.20 per month. A 50-year loan for the same amount and in the same amount costs $ 1,691.15 per month in principal and interest. "

So that consumers can save $ 205 per month with $ 332,058 more than the additional 20 years. For some people, a steep and unacceptable compromise between low monthly rates and hundreds of thousands of dollars in lost equity.

And what if at the beginning of everything else, your property requires major repairs after the first 30 years? That would be another factor, eating in your own capital, with the operation of a 50-year mortgage.

So you have it ... for the hard for the immediate cash, a 50-year mortgage could be the answer. But others, on the topic from a long-term perspective, a downside or two. You have to view the decision depending on various factors, such as your planned length of stay in the property-and your long-term capital needs.

But at least the alternative to 30-year mortgage is here and will probably stick around for some time, while the market tries to break in these sultry prices and rising interest rates.

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(520 words, Copyright May 2006 Ugur Akinci)

by Ugur Akinci, Ph.D.

Creative Copywriter and Technical Communicator

writer111@gmail.com

www.writer111.com

Ugur Akinci, Ph.D. Creative is a copywriter, editor, and experienced Technical Communicator specializing in fundraising packages, direct sales copy, web content, press and high-tech documentation.

He worked as a Technical Writer for Fortune 100 companies for the past 7 years.

You can reach him at writer111@gmail.com for all of your text assignments.

Please visit his official website http://www.writer111.com for clients and further information on his multidisciplinary background and career.