For homebuyers who are considering buying a home in higher-priced areas, the option of the long-term mortgage - 40 to 50 years often comes up. But is it the right choice for you? What are the pros and cons of making such a decision?
To help you decide whether this is an option you want to consider, let's take a closer look at this type of long-term mortgage.
What is the 40-50 Year Mortgage?
Like most other mortgages available to homebuyers, the long-term mortgage (40-50 years) is an option that some are beginning to consider. It's not much different than the standard 30-year mortgage with the exception that it stretches out for up to 20 more years. It's hard to imagine that many people would want to take on this loan length because so many potential issues can get in the way of completing the term. However, some mortgage lenders will suggest this type of loan under a few specific circumstances.
When a Long-Term Mortgage is Recommended
Homebuyers are occasionally offered the option of the long-term mortgage as a financing option. Let's look at when this occurs:
- You're looking at higher-priced areas. If you're looking at properties that fall into the high-end mortgage category, you may be offered this type of mortgage to stretch out your payments and essentially lower your monthly principal amount.
- You're looking to qualify for a bigger loan. If you have an idea of the principal amount that you want to pay, you can benefit from the long-term mortgage. For instance, if you know you want to pay $1,500 per month and you take out a 30-year mortgage, you will qualify for a smaller loan than with a 40-year mortgage. Some people take the lengthier option as a way to move into a bigger house for the same principal payment.
While the 40-year loan is becoming more common, the 50-year loan is still only offered by a few lenders because the likelihood of it actually being paid off is so slim. However, if youre looking to move into a high-priced area, or simply want the benefit of a bigger loan, then pursuing the 40 or even 50 year long-term mortgage may be right up your alley.
