40 – 50 Year Mortgages

For home buyers new to the world of mortgages, traditional 15- and 30-year fixed rate mortgages are usually talked about most. However, those who are considering buying a home in higher-priced areas should know about the option of even longer-term mortgages: 40-50 year mortgages. These fixed rate mortgages may cut monthly payments by quite a bit, but are they the right choice for you? What are the pros and cons of taking on such a lengthy loan?

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 fixed rate mortgages available to home buyers, the long-term mortgage (40-50 years) is an option for borrowers who want an unchanging monthly payment that’s spread out over a long period of time. 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

Home buyers are occasionally offered the option of the 40-50 year mortgage as a financing option when certain needs arise:

  • 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. However, adding a couple of decades to the loan terms may lower your mortgage interest rate, but it also means you’ll pay much more in interest over time.
  • You’re looking to qualify for a bigger loan. If you have an idea of how much you can afford to pay each month, 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 monthly 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 you’re looking to move into a high-priced area, or simply want the benefit of a bigger loan, then pursuing a 40- or even 50-year long mortgage may help you achieve your homeownership goals.