The arrival of the 50-year home mortgage is seen as a viable solution for a lot of homeowners who are cash-squeezed and looking for loan options more suitable for them. This home mortgage likewise offers homeowners a way to consolidate high interest loans. This type of home mortgage is also beneficial for borrowers who are searching for alternatives that offer them a way to afford more house for their money.
There are three different types of 50-year mortgages. They are:
· The fixed rate
· The adjustable rate, which may or may not come with a fixed rate for the first few years of the loan
· A loan that extends the principal payments for a period of 50 years, but obliges borrowers to come up with a balloon payment after a certain number of years
The 50-year home mortgage is also a good option for buyers who need to keep their payments low in spite of record home prices and rising rates. The most obvious advantage of the 50-year home mortgage is the lower payments as a result of the loan being stretched out for fifty years. Because the amortization is longer, the monthly payment is reduced, saving homeowners money every month. The monthly payments for a 50-year home mortgage can be as low as those for a 1-year mortgage. And, compared to a 30-year loan, the five-decades-long home mortgage normally costs around a quarter of a percentage point higher in interest.
The 50-year home mortgage is typically set up as a 5/1 adjustable rate mortgage. This means that for the first five years, the rate will be fixed, but will adjust with the market for the next 45 years. Because of this feature, the 50-year home mortgage becomes suitable for a buyer who needs assistance for the first five years of the loan. During this period, the buyer may opt to refinance into a more conventional mortgage with a shorter term.
Other benefits of the 50-year home mortgage include:
· Monthly payments are lower compared to more conventional mortgages like the 15- or 30-year mortgages
· Helps offset record-high home prices since the lower house payment boosts your purchasing power, allowing you to buy more of a house in a high-cost housing market
· An excellent option for those who are capable of making only small payments at first, but plan to refinance or sell the home in the future
· The minimum payments required will reduce the balance gradually
· The lower monthly payments enable you to buy a more expensive house, which you would find improbable otherwise
· An excellent way to enhance monthly cash flow for those considering purchasing or refinancing a rental property
With all the benefits the 50-year home mortgage offers, you might want to consider checking it with your mortgage lender. The important thing to remember is that not all 50-year loans are the same. There are lenders that offer a fixed rate for the entire life of the loan, while others offer options like a fixed rate for a number of years and a variable rate for the rest. Be sure to be fully informed first before making a decision.
Get more of Matt Peters' FREE tips and information on Mortgage Refinancing at http://www.homemortgageonline.org
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