Mortgage leads loans Rates

The 50 year mortgage provides another alternative to interest only mortgage, and adjustable rate mortgage. During the high house prices time, the cash-strapped home buyers opt for interest only mortgage, or adjustable rate mortgage. Naturally, the mortgage payment is lower like the interest only mortgage, or adjustable rate mortgage.

In interest only mortgage, the home owner only pays the interest. The principal stays the same thru out the life of the mortgage. In adjustable rate mortgage, the home owner pays same mortgage payment on a regular basis. Some portion of adjustable rate mortgage payment goes to pay out the principal. In some instances, adjustable rate mortgage payment does not cover payment on principal. This is more commonly known as negative amortization. This happens when the interest rate goes up.

The home owners still gains home equity. This is the main advantage of 50 year mortgage over the interest only mortgage and adjustable rate mortgage. However, the home owner gains more home equity faster with shorter term mortgage. Not to mention, the home owner pays more interest at the maturity of the mortgage.

Mortgage lenders actually prefer a shorter mortgage like 15 year mortgage. Generally, the longer term mortgage has more chance that the home owner will be in financial trouble. Fifty percent of the first-time home buyers are on 30 years old or older. The mortgage matures around at the age of 80 years old. That is long after the normal retirement age.

50 year mortgage is riskier type of mortgage to mortgage lenders. So, the mortgage lenders would usually charge a higher interest rate. Even though the mortgage lenders charges higher interest rate, the mortgage payments are actually lower than shorter term mortgage.

The home buyers can opt to buy higher priced home with 50 year mortgage. Or, the home buyers can save or invest the money from savings of the lower mortgage payments. This may be a better idea for unstable house prices when there is a chance for homes to depreciate.Source: mortgage calculators

Tags: 50 year mortgage, adjustable rate mortgage, lower mortgage payments, Mortgage lenders

This entry was posted on Tuesday, August 19th, 2008 at 3:23 pm and is filed under Home Mortgage, Mortgage leads, Mortgage loans, Mortgage rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.