Liked Your Interest Only Mortgage? You Will Love The Fifty Year Mortgage!

So your adjustable rate, interest only mortgage is now so high you can’t afford the payments?

Don’t worry!  The mortgage industry has just the answer:  The 50 Year Mortgage!

With a 50 Year Mortgage the lender gives you a fixed introductory rate for five years, followed by an adjustable rate mortgage for the remaining 45 years of the loan.

With about one-half of first time home buyers at age 32 or older a 50 year long mortgage would continue well beyond the average retirement age.

So how does a 50 year mortgage compare to the traditional 30 year mortgage?  Well, since a 50 year mortgage is not a fixed rate mortgage a direct comparison is impossible.

But let’s pretend for a moment that you could get a 50 year fixed rate mortgage and compare it to a 30 year fixed rate mortgage, both for $250,000.00 at six percent interest.

The monthly note on the 30 year loan would be $1,498.88 and on the 50 year loan it would be $1,316.01, resulting in the 50 year mortgage being $182.87 lower per month.

However, the total for interest and principal payments on the 30 year loan is $539,595.46 while the total on the 50 year loan is $789,607.19, costing the borrower $250,011.72 more than the comparable 30 year loan.

Many of the lenders that were in the subprime market are now offering these 50 year mortgages to their current borrowers as a “way out” of their adjustable rate mortgage.

You may want to consider having an experienced attorney go over your options with you before you consider jumping into a 50 year obligation.