fha 40 year mortgage

As the cost of real estate has dropped in recent years, many lenders have developed new products to assist homeowners with their mortgage needs. One of these new offerings is the 40 year mortgage loans. Here are the pros and disadvantages of this mortgage of 40 years.

A mortgage of 40 years is simply a mortgage with 40 years repayment plan. This means you pay interest and principle to the mortgage loan for a period of 40 years. The advantage of a mortgage of 40 years is that monthly payment is much lower than a traditional 15 or 30 years mortgage. Suppose you borrowed 100,000 U.S. dollars to buy your house at 6.25% interest with a traditional 30-year mortgage, your monthly payment for this loan would be around $ 600. If you financed the same house with a mortgage of 40 years would be a higher interest rate on the longer term, but your monthly payments would be around $ 560th This may not seem like much, but if your monthly budget is stretched thin, this could be a difference for you.

There are disadvantages to mortgage of 40 years. Because the term is longer than a traditional mortgage, there are other risks for mortgage lenders, this risk is passed to the borrower in the form of a higher interest rate. The interest rate you receive for this loan is usually, 25 or, 375 percentage points higher than a traditional mortgage depending on your creditworthiness. Another disadvantage of this 40-year mortgage is that you have much more interest to the lender that extra ten years of your mortgage. Mortgages are front loaded with interest, so you pay the most in the early years of the mortgage loans. This means that you build equity at a painfully slow with a mortgage of 40 years.

Financing your home with a mortgage of 40 years could invite you to purchase more home than you can really afford. This could lead to serious financial difficulties on the road. A mortgage of 40 years still a good deal for homeowners, low monthly mortgage payments. You can always refinance on the road when the improving financial picture that allows you to create a mortgage, the equity in your home faster. To find out more about your options when it comes to your mortgage, register for a free mortgage officer on the links below.

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Louie Latour specializes in homeowners, such as advertisements, to identify common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need To Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

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