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Information on mortgages, home equity loans, and consumer credit to help you use the power of financing to your advantage.
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Mortgages > Purchase
40 year fixed loan - 40 year mortgage
A 40 year fixed loan? Who in there right mind would take out a 40 year mortgage? You’d be surprised! With rates on the move higher, the 40 year mortgage becomes a much more desirable mortgage (or people think). An easy way for most people to justify buying a house that they can’t truly afford is to take out a 40 year mortgage. When you amortize the 40 year mortgage the payments are divided among 480 months.
Is a 40 year mortgage a good idea?
As most answers go, “it depends”! You really need to do your homework on this loan. Make sure you know what you are getting into before you get into a 40 year mortgage. The payment might sound really appealing, but the long term affects may not be so glamorous. Remember the term when buying a car, “upside down” or “negative equity”? That could be a reality in many peoples home in the near future. A 40 year mortgage is making those terms come to reality with homes today. The time period we are in today for houses is great; many people are making hand-over-fist on selling homes. What happens when there’s a slow down or the “Bubble bursts” and you are stuck in your 40 year mortgage? Picture this: you just signed a loan for a 40 year mortgage, rates rise for new home buyers, home prices start to drop, economy inflation is gradually increasing…..is your heart racing or skipping a beat? It should be. The 40 year mortgage could get you even further into debt than you originally had planned.
A great advantage to the 40 year mortgage is the payment. If you have a good handle on your budget and the market is good than the 40 year fixed loan could work for you. Always keep in mind before choosing the 40 year mortgage other loan options like:
40 year mortgage vs. 30 year mortgage
40 year mortgage vs. 15 year mortgage
40 year mortgage vs. 10 year mortgage
40 year mortgage vs. 3/1 ARM
40 year mortgage vs. 5/1 ARM
40 year mortgage vs. 7/1 ARM
There are other good options out there, but start with the basics first. Be smart and plan out the best you can before choosing the 40 year mortgage. Know your goals and future plans with the home.
• Apply now for a home loan!
The tips on this website should be considered food for thought only. Lendingtips.com is a clearinghouse of ideas, not a professional adviser. Before any important decision, please consult the appropriate professionals (lawyer, accountant, real estate agency, broker etc.).
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• Mortgages > Purchase Articles Archive
• Mortgage Loan Calculator Use this calculator to determine your monthly payment and amortization schedule.
• Mortgage Qualifier Can you buy your dream home? Find out just how much you can afford!.
• Refinance Breakeven Should you refinance your mortgage? Use this calculator to determine when you will breakeven!
• Rent vs. Buy Are you better off buying your home, or should you continue to rent?.
• Amortizing Loan Calculator Enter your desired payment - and let us calculate your loan amount. Or, enter in the loan amount and we will calculate your monthly payment!
• ARM vs. Fixed Rate Mortgage Use this calculator to compare a fixed rate mortgage to two types of ARMs, a Fully Amortizing ARM and an Interest Only ARM.
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