50 Year Mortgage
For lower monthly mortgage loan payments, consider a 50 year mortgage
As home construction, labor, and real estaste costs soar, and in times of higher interest rates, some consumers may find 50 year mortgages to be the best way to obtain an affordable payment plan.
Some lenders now offer a 50 year adjustable rate mortgage loan.
40 year mortgages account for only 5% of all home loans, so how well a 50 year mortgage loan will be received by consumers is still unknown. So unknown, that only a very small number of lenders are offering the new 50 year mortgage loan plan. Statewide, which introduced its 50 year loan in March, has received only an estimated 220 applications.
The introduction of the 50 year mortgage loan indicates competition amongst lenders to secure new customers.
Consumers need to be aware of two factors regarding a 50 year mortgage:
1) 50 year mortgages build equity very slowly.
2) The rates on these loans are adjustable, which means the monthly payment could increase.
However, the 50 year mortgage isn't considered as risky as an interest only loan, or a mortgage that allows borrowers pay even less than the interest.
With those loans, a 'negative amortization' could occur, if a borrower does not build any equity and ends up owing more than a home is worth.
Mortgage experts warn consumers that the 50 year mortgage loan is best suited if you plan to stay in the home for about five years while the loan's interest rate remains fixed.
Visit Credit Federal to apply for your good or bad credit mortgage loan quote.
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