50-year mortgage debuts
From CNN Money:
As home prices and interest rates keep rising, lenders have figured out a way to keep the dream alive for millions of people who want to own their own home. It’s called the 50-year mortgage.
According to a report Wednesday in USA Today, a handful of small lenders have begun offering 50-year adjustable-rate loans to buyers who need to keep payments low in the current economic environment.
I personally don’t believe this is going to be a good idea for most folks. Let’s just say you wanted to have the house paid off by the time you retire at 65 and the loan goes it’s full term. You would have to buy it at 15! I don’t know about most of you, but I couldn’t afford to buy a house at 25, much less 15! :)
I think this is an attractive way to lower your house payment, but seriously, you’ll end up paying huge amounts in additional interest and you will be earning less principal over the same periods of time.
My recommendation- stay away from the 50-year mortgage. If you’re seriously considering it, consult with a financial advisor.
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This tactic seems similar to the “no money down” promotion so many new subdivisions advertise. There are plenty of people out there dumb and/or impatient enough to jump on the bandwagon.
There are thousands of different options available for people. I normally never recommend a loan that offers over a 30 year option or an interest only payment; however, for a person that is a disciplined investor, these options may very well be the best scenario. Most people spend more time pondering over a carton of eggs than over other options than a 30 year fixed rate mortgage. With the mortgage being the largest debt people will likely get into, it pays to know many options and sometimes the best one may be zero down or interest only. It also pays to work with a mortgage loan officer that knows all of the options and combine that with a financial advisor that can help guide the decision.
Jonathan, thanks for the comment.
I have worked with Jonathan and Valley Team Mortgage in the past and recommend them for your mortgage needs in the Roanoke Valley, Smith Mountain Lake New River Valley and wherever you need a mortgage.