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Chrissy
Guest
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 Posted: Wed Jun 08, 2005 8:58 am Post subject: 40 year mortgage lowers your monthly payment |
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| what is 40 years mortgage? |
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 Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 814
Location: OHIO
195.95 Dollars($)
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| Posted: Wed Jun 08, 2005 10:12 am Post subject: 40 Year Mortgage |
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Hi, Chrissy
Welcome to MortgageFit forum.
A 40 year mortgage is a conventional mortgage which allows a borrower to repay the entire loan in 40 years.
Such a mortgage offers a choice between fixed and variable rates of interest. The monthly payments are lower than other mortgages but due to greater time period, a 40 year mortgage involves greater costs throughout the entire term of repayment.
Regards,
Jessica.
Last edited by Jessica on Tue Jul 26, 2005 3:48 am |
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Guest
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| Posted: Wed Jun 08, 2005 11:09 pm Post subject: extra cost |
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| how much extra is to be paid when somebody goes for 40 year mortgage rather than any other mortgage? |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 814
Location: OHIO
195.95 Dollars($)
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| Posted: Thu Jun 09, 2005 4:21 am Post subject: Low Monthly Payment and High Interest Amount |
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Hi,
If someone chooses a 40 year mortgage, he will have to pay a low monthly payment compared to a 30 year mortgage.
But the total interest paid in the 40 year mortgage is much greater than that paid for 30 year mortgage.
Suppose in a 30 year mortgage, if the loan amount is $100,000 and the interest rate is 6%, then the monthly payment is $594.83, the total interest being $114160.
But if it is a 40 year mortgage with the same loan amount and interest rate, then the monthly payment is $545.09 and he will bear a total interest of $161689.
Although he is paying $49.74 less on a monthly basis for the 40 year mortgage, yet he has to pay $47,529 extra as the total interest.
Hope this example will help you to clear your concept about a 40 year mortgage.
For MortgageFit
Regards,
Jessica
Last edited by Jessica on Fri Dec 09, 2005 4:41 am |
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jacob
Guest
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| Posted: Fri Aug 05, 2005 2:05 am Post subject: |
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| we are first time buyers. my wife and i don't earn much to qualify for a mortgage. My friend who is mortgage broker suggested we go for 40 year mortgage because it can reduce monthly payment. But it has negative amortization and rates might increase after six months. So we may have to pay more than we owe. What should we do? |
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Jessica
Community Mentor
Joined: 08 Jun 2004
Posts: 814
Location: OHIO
195.95 Dollars($)
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| Posted: Fri Aug 05, 2005 3:41 am Post subject: RE: |
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Hi Jacob
Welcome to the forums.
A negative amortization on a 40 year mortgage is definitely not a good deal since you are facing a shortage of funds. Moreover if interest rates increase after some time, you will have to pay more and hence you will owe more than you have borrowed.
I would advice you to go for an interest-only mortgage. That will require you to pay low interests and at least reduce your monthly payments for a few years within which you can become financially stable. Then you can proceed to follow a repayment plan.
So you should shop around for the interest only home loan that you can afford to pay back.
Wish to receive your feedback soon.
For more discussion on this topic please click here.
Regards,
Jessica. |
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