50 Year Mortgage
50 year mortgages are making a come back, but are they the best solution for you?
Consider that half of all first-time home buyers are about 32 years of age or older according to the National Association of Realtors. How if each of those buyers purchased a 50 year mortgage, and they never re-financed or made any extra payments they would not pay their mortage off until well into their 80’s — if you had thoughts of retiring by the time you were 55 then you would want to think again.
Do you want to leave something for your children or spouse that is valuable, or do you want to leave them a white elephant?
The monthly mortgage cost on a 50 year mortgage will be lower, but your total cost over the life of the mortgage will be considerably higher than that of a 30 year mortgage because you are stretching the mortgage over 20 more years. How much more? That’s hard to say because the rate of the mortgage will move up and down annually unless you can find a lender that will give you a fixed rate 50 year mortage.
Most lenders opt for hybrid mortgages meaning that they provide an introductory rate that lasts for a certain number of years – typically 5 years, and then after that the rate will be adjusted anually up or down.
Using an example to show you how much you save per month (or loose over the term of the 50 year mortgage) lets look at a fictional 50 year mortgage for $300,000.00. For a 30 year mortgage at 6.5% interest you will pay about $1,900.00 per month. The same mortgage stretched to 50 years would work out to about $1,700.00 per month or a savings of about $200.00 per month. But look at the extra 20 years you’ve added to your mortgage and you will pay over $330,000.00 more!
Over the long-term, a 50 year mortgage only benefits the lender not the home owner. Before you decide to lock yourself into a 50 year mortgage, speak to your lender or better yet ensure that you speak to a home mortgage broker.
To learn more about the different types of fixed rate remortgage options visit http://www.BestHomeMortgageLoans.oibo.org where you will find this and much more including mortgage rates, and quotes from leading lenders.