Stewart Brown Jr – Mortgage Loan Originator – Purchase or Refinance
| A 40-year mortgage is like a traditional 15- or 30-year mortgage but offers an extended payment term. If a homeowner remains in the property for the life of the loan and makes payments as agreed, they’ll pay off the mortgage in 40 years. A 40-year home loan can provide some buyers with an affordable way to purchase a home in today’s increasingly expensive housing market, though it’s important to first weigh the benefits and drawbacks of this loan term.
The monthly payments on a 40-year mortgage are typically lower than shorter-term loans. However, you’ll end up paying more in interest because you make payments over a longer period. Additionally, 40-year fixed mortgage rates may be higher than those on 15- and 30-year loans. Similar to home loans with more common payment terms, the structure of a 40-year mortgage can vary by lender and loan program. Here are a few ways a 40-year loan could work: A 40-Year Mortgage with a Fixed Rate option is pretty straightforward. With a fixed-rate mortgage, the monthly principal and interest payments remain the same for the entire loan term. A 40-year mortgage extends the mortgage term by 10 years when compared with a traditional 30-year mortgage. A 40-Year Mortgage with a Variable Rate allows borrowers to get an adjustable-rate mortgage (ARM) with a 40-year term. An ARM has a fixed rate for a set time (for example, five, seven or 10 years) and then adjusts periodically for the remaining loan term. A 40-Year Mortgage with an interest-only period is a loan in which mortgage payments go toward the interest for a specific amount of time before converting to principal and interest payments. A 40-Year Mortgage with a balloon payment allows you to benefit from lower payments during much of the loan term but then you have to make a large, lump-sum payment when the mortgage comes due. It’s worth reiterating that the CFPB considers all of these loan types to be subprime or risky for borrowers. Keep in mind that 40-year fixed mortgage rates may also be higher than loans with shorter terms, just as interest rates on 30-year mortgages are more expensive than 15-year mortgages. But even if they don’t carry a higher interest rate, the 10-year difference in the two loan terms can cost borrowers a huge amount over the life of the loan. |
| A 40-year mortgage is like a traditional 15- or 30-year mortgage but offers an extended payment term. If a homeowner remains in the property for the life of the loan and makes payments as agreed, they’ll pay off the mortgage in 40 years. A 40-year home loan can provide some buyers with an affordable way to purchase a home in today’s increasingly expensive housing market, though it’s important to first weigh the benefits and drawbacks of this loan term.
The monthly payments on a 40-year mortgage are typically lower than shorter-term loans. However, you’ll end up paying more in interest because you make payments over a longer period. Additionally, 40-year fixed mortgage rates may be higher than those on 15- and 30-year loans. Similar to home loans with more common payment terms, the structure of a 40-year mortgage can vary by lender and loan program. Here are a few ways a 40-year loan could work: A 40-Year Mortgage with a Fixed Rate option is pretty straightforward. With a fixed-rate mortgage, the monthly principal and interest payments remain the same for the entire loan term. A 40-year mortgage extends the mortgage term by 10 years when compared with a traditional 30-year mortgage. A 40-Year Mortgage with a Variable Rate allows borrowers to get an adjustable-rate mortgage (ARM) with a 40-year term. An ARM has a fixed rate for a set time (for example, five, seven or 10 years) and then adjusts periodically for the remaining loan term. A 40-Year Mortgage with an interest-only period is a loan in which mortgage payments go toward the interest for a specific amount of time before converting to principal and interest payments. A 40-Year Mortgage with a balloon payment allows you to benefit from lower payments during much of the loan term but then you have to make a large, lump-sum payment when the mortgage comes due. It’s worth reiterating that the CFPB considers all of these loan types to be subprime or risky for borrowers. Keep in mind that 40-year fixed mortgage rates may also be higher than loans with shorter terms, just as interest rates on 30-year mortgages are more expensive than 15-year mortgages. But even if they don’t carry a higher interest rate, the 10-year difference in the two loan terms can cost borrowers a huge amount over the life of the loan. |
Reach out to me for further detailed information on 40 Year Term loan programs.