40 or 50 Year Mortgage Loan Basics

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Looking to save money on your monthly mortgage payment? Then a 40 or 50 yr mortgage may be the way to go. A 40 yr mortgage is much more common than the 50 yr mortgage but a 50 yr mortgage does exist. The basic tried and true mortgage is the 30 yr fixed but lately lenders have introduced the 40 and 50 yr mortgage. These mortgages provide a lower montly payment because they are financed over a much longer period of time. The introduction of these mortgages was mainly brought on by rising home prices when wages were not keeping pace. Alot of borrowers were unable to afford the basic 30 yr fixed mortgage and didn't want to go to an adjustable rate mortgage so they introduced the 40 to 50 yr mortgages to spread the payments out over an extended time. It will give you a lower monthly payment but you will pay more over the life of the loan because you are stretching the term of the loan out to 40 or 50 yrs. There are alot of borrowers that aren't that concerned anymore with paying off their mortgages. They are more concerned with keeping their homes in times when everything else from rising taxes to rising homeowners insurance premiums (especially here in Florida) are making it very hard for homeowners to make their monthly mortgage payments.

Loan Options

There are different loan options with the 40 and 50 yr mortgages.  Some are amortized over 40 yrs but are due and payable in 30 yrs. This is called a 40/30. This could still be a good option as most borrowers do not keep a mortgage for 5-10 yrs let alone 30 yrs.

Some 40-50 yr mortgages can be fixed for 5 or 10 yrs and then go to an adjustable rate. This is of course a riskier loan but if you think you may be selling in the near future it may still be a great choice. Most borrowers that are looking for a 40 or 50 yr mortgage are looking for relief on their monthly mortgage payment now. If you are interested in this type of mortgage we would also look at an interest only mortgage as that may save you more money monthly depending upon your credit score.

40 yr mortgages are sometimes interest only for 5-10 yrs at which point any remaining principal would be amortized over the life of the loan. Most people would have to refinance because the payment would skyrocket at that point.

The lender usually charges an interest rate about .125% to .25% higher than a 30 yr fixed.

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 Lenders are still offering these products so please give us a call 1-866-771-1594.