Recently some lenders started to offer 50
year fixed rate mortgages. This type of loan programs is for the
borrowers who are not comfortable with the concept of the interest-only
loan programs. There are pros and cons for this type of loan programs.
If you have an excellent history of making your mortgage payments on
time, you may be qualified for a mortgage which allows you to defer
interest rather than spreading it out over 40 or 50 years.
50 year
fixed rate mortgage programs are for borrowers who are looking to have a
low monthly payment. This program is great for people with low monthly
income that are unable to afford the home of their dreams if they were
in a conventional thirty year mortgage.
50 year mortgage loans drop
the mortgage payments down comparable to what interest only loan
payments would be. Some borrowers and lenders are more favorable to this
loan because principle payments are made to the loan.
The longer the
mortgage term, the slower the rate at which you are paying down the
principal on the home. For that reason it is important to note that
while you are still paying down the principal, you are paying it down
much slower on a 50 year mortgage than on a 30 year mortgage.
Interest
only loans can be risky because of the payment adjustment following the
initial interest only period. A 50 year mortgage provides a very similar
payment without the risk of huge payment increases at the end of 2, 3,
or 5 years. If you require a low payment but don't want to risk payments
to interest only, ask your mortgage broker if a 50 year term is right
for you.
A 50 year term mortgage will prove to be very popular in high
priced areas such as California. People will always want to buy their
own home but will need to use inovative mortgage products like this in
order to get their monthly payments affordable. In many cases it all
comes down to monthly cash flow and these kinds of loans provide cash
flow help.
There are many different forms of 50 year mortgages. These
could be 50 year fixed mortgages, to 50 year amortorized ARM mortgages
to 50 year interest only. Talk with your mortgage professional to find
out which one is right for you.
50 year mortgages are a very popular
alternative to interest only mortgages for borrowers whose credit scores
do not allow them to qualify for a regular interest only mortgage
program. However, if your goal is to obtain lower payments, there may be
alternatives. If you pay your mortgage on time and have at least 20%
equity in your property, use your good history to qualify for an
interest only or even a minimum payment option fixed rate loan no matter
what your credit score looks like. Contact us at 888-275-6788 for more
information.
50 year loans are great for areas of high housing costs,
thus bring the payment in a more suitable reach by extending the term of
your loan.
With the lower payment of the 50 year loan you have more
purchasing power, which means you can qualify for a bigger home.
There
are interest only loans available that are interest only for up to 15
years. In that time you can also make additional principal payments. A
loan with this scenario would be a good alternative to a 50 year
mortgage because it will be paid off in 30 years. This is when most 50
year mortgages payments balloon and are due in full.
