While this can be a useful product for some borrowers, it’s one that you need to approach with caution.
Though they’re somewhat uncommon in terms of the overall mortgage market, many lenders offer 40-year loans as part of their product lineup, though they may not promote them extensively. You may have to inquire with your lender about their availability if you’re interested in one.
The key reason for getting a 40-year mortgage is that they allow you to stretch out your payments as much as possible, thereby minimizing what you have to pay each month. The downsides is that it takes a very long time to https://yourloansllc.com/title-loans/ pay off the loan, the total interest payments are significantly higher than on a comparable 30-year mortgage, and you’ll build equity only slowly.
On top of that, the reduction in your monthly payment from taking out a 40-year mortgage is fairly modest, compared to a 30-year mortgage, perhaps only $100 a month on a $250,000 mortgage. (more…)