Mortgage lenders are always on the lookout for new ways to take money from homeowners. The 40 year mortgage is a perfect example of this. Here is what you need to know about this expensive mortgage option.
The 40 year mortgage is very similar to a traditional 30 year mortgage; the main difference is that the loan is amortized over 40 years. Because there is more risk for the lender interest rates are higher and you will pay significantly more in finance charges for that extra ten years. Depending on you needs you will be able to choose fixed or adjustable interest rates.
The advantage of a 40 year mortgage is the lower payment amount. The problem with this loan is that you pay most of the interest up front; while your payment will be lower you will build equity at a snails pace. Most of your money in the beginning goes into the lender's pocket as interest.
Is a 40 Year Mortgage Right For You?
If you are considering a 40 year mortgage to purchase your home and need the lowest payment possible, a 40 year mortgage could be used as a stop-gap measure until your income will support better financing. If you plan on refinancing or moving in the next five years this is not the mortgage for you. Most homeowners will find traditional 15 or 30 year mortgages are the most cost-effective ways of financing their home purchases.
You can learn more about your mortgage options including how to avoid common mistakes, by registering for a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free guidebook today at: http://www.refiadvisor.com
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