40-year mortgage

Guest

I was looking for a mortgage with low monthly payments when I heard about 40-year mortgage. It is quite a new term to me. I want to get some more details on it. Please help.

Guest

Hi Cindy,

A 40-year mortgage is a conventional mortgage where the principal is required to be paid of over period of 40years. In many cases the lenders extend the time span of its 30-year fixed rate mortgage to 40 years. Some offers a 40-year version of ARM also.

Hope this information will help.

Wish you good luck.

James

blue · Posted: Fri Nov 04, 2005 1:26 pm Post subject:

Hi Cindy,

I want to add some more information. Yes, what you have heard is right. Forty year mortgages do have lower monthly payments, even lower than the 30year type.

It allows the borrower to have lesser payment and thus gives a choice to go for more expensive houses.

The demand is still limited for this type of loan, as there are a very few lenders who offer this type of mortgage

Hope this information will help you.

Regards,
Blue

Samantha · Posted: Fri Nov 04, 2005 1:58 pm Post subject:

Hi Cindy,

What Blue has mentioned is correct that there are few lenders to offer a 40-year mortgage, but with steep increase in the home prices this loan is gaining popularity rapidly. As a result more lenders are now getting interested to offer 40-year mortgages.

40-year amortization on ARM is more common with the lenders. Different lenders structure the loans in different ways, but whatever it is the borrower gets the same benefit of lower monthly payments.

This loan is attractive to first-time home buyers or people living in high cost areas looking for controlled monthly payments.

So, the benefits may be summarized as -

Monthly payments lower than the other traditional mortgage
purchasing ability of the buyers increases

But there are drawbacks too. Some of them are -

More interest needs to be paid in total over the life span of the loan
Equity builds up very slowly as a tiny percent of the payment is considered to reduce the principal amount

Hope this information adds some more pictures on the topic.

God bless you.

Thanks,
Samantha

Guest

Hi all,

The information is great. Thanks to all, for paying attention and contributing to my query.

I want to ask another one. For whom this loan is more suitable?

Regards,
Cindy

Samantha · Posted: Fri Nov 04, 2005 2:18 pm Post subject:

Hi Cindy,

I take this opportunity to thank you for putting up the queries. This helps us to share ideas and gain more knowledge.

This type of loan may be considered more suitable for -

Young first time home buyers who has many earning years left
People who want to go more expensive houses which is otherwise not affordable with other traditional type
People who can afford small down payment
People who live in costly areas and want to have manageable monthly payments

Feel free to ask if you have more doubts. You can refer to the section on 40 years mortgage to get more idea.

God bless you.

For MortgageFit,
Samantha

Guest

Hi Samantha,

Thanks you for the reply. I have gained a lot from the information provided by you the rest.

Regards,
Cindy

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