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50 Year mortgage loans

It seems like yesterday that the 30 year mortgage was the standard loan around. Welcome the 50 year mortgage. Yes, you read it correctly, 50 years.

It's important you talk with your mortgage professional to see if this is an option thats open to you. Each program has its own qualifying guidelines and there are some changes that take place when going from a standard 30 year loan to instead taking a 50 year loan.

This new loan may be a good alternative to an adjustable rate mortgage since you get a low payment without the risk of your payments going higher. Although it is not available with all lenders yet, it is gaining popularity and should be an option with most lenders in the near future.

Another great alternative to the 50 year mortgage is the 30 year interest only, both have similar monthly payments

The difference in the monthly isn't that big between the interest only and the 50 year mortgage. But it might be that $100 to $200 difference a month which might be the difference in whether you're able to pay ALL of the bills at the end of the month.

While your payments are going to be lower with a 50 year mortgage when compared with a 30 or 40 year amortization, you might be surprised at how small the difference is per month. For example a $200,000 loan at a 7.5% interest rate, your payments on a 50 year term will only be $118 lower per month on a 30 year mortgage.

So if you're goal is to pay off the home, you're probably better off in a loan amortized over 30 years. If your goal is to have a lower payment and still pay off some principle a 50 year loan is for you.

One advantage of a 50 year loan is that your payments will never increase throughout the life of your loan. Interest only loans have a interest only period after which your payment will increase in order to payoff the loan during the remaining years of the term.

The benefit of a 50 year amortized loan is not only the lower payments on a monthly basis but will include principle payments as well.

For more information regarding this topic, please call Mike Williams at 516-921-9000 or email mwilliams@northshorefunding.com.