Is 50 Years Too Long for a Mortgage?

Is 50 Years Too Long for a Mortgage?
By: CJ Cassidy

G

as prices show no signs of coming down
,
and many of us have wondered how to stretch an already tight budget.
N
ow some mortgage lenders believe they might offer relief to home buyers in the way of fifty year loans.

So far, only one lender in California is offering those loans.

Around the Heartland, we found some lenders who will go as high as forty years.But, is going over the typical thirty year mortgage a good idea?

We went to some brokers to find out.

"I want a fifty year mortgage when I'm 70 if I qualify," Realtor Aaron Abernathy says.

Joking aside, realtors say the new fifty year mortgage loan offers prospective home buyers a new "lease on life."

"It would allow buyers who normally couldn't afford the four bedroom to be able to afford the four bedroom, because of longer terms and lower payments," Abernathy explains.

B
ut be carefu
l,
because here's how it would work
:

Y
our monthly payment on a
$
100
,000
home at
a 6.6%
fixed interest
rate
over 30 years would come to
$6
50
.00
a month.

T
hat payment would go down by about
$70.00,
if you stretched it out over fifty years.

However,

in the end, you'd be shelling out more than
$
116
,000
in finance charges over the extra twenty years
,
and that's for someone with great credit.

M
ortgage lenders say there are
also
other factors to consider when you think about buying a home.

"You
r
cr
edit score, how much you're needing to borrow
: if it's
100
%
financing versus if you have
a 20%
down payment.
All
that makes a difference as what your interest rate would be
," Dawn Dauervice President of The Bank of Missouri says.

She adds that
most people in the
H
eartland prefer to stay with thirty year loans.

"I
think because ou
r
loan amounts and sales prices of homes are not comparatively high
, as they are in California," she says.

B
ut realtors point out there's always room for change.

"W
e saw it in the auto industry with four, five and six year terms
designed
to make vehicles affordable
. I
think you will see the same in this industry
," Abernathy says.

To figure out
what plan is best for you
,
simply talk with a lender to
sort
out the pros and cons.

S
o far, it looks like
S
tatewide
B
ancorp out of
C
alifornia is the only lender to offer the fifty year mortgages.

I
t isn't licensed to offer those loans in any of our
H
eartland states.