50 Year Mortgage Raises Eyebrows

One way to afford more house for your money in the current market... Spread your mortgage out over 50 years and your monthly payment goes down. Some analysts think that the plan could backfire, but for borrowers in California, the most expensive state to buy a house, it may be sweet relief. Statewide Bancorp began to offer a 50-year term mortgage in March as an alternative to interest only ARM loans. The “exotic” loans had become tempting to California borrowers who can’t afford the normal monthly payment of more than $4000 for a standard home loan.

While some interest has been shown for the 40, and now 50, year mortgages, analysts don’t think that they will take over the market any time soon. If the average person purchase and move to a new home every seven years, why get a 50-year mortgage? The answer is the bottom line monthly payment, the number that most people consider when obtaining a loan. In that case, the 50-year term may have its enthusiasts but will probably never become the norm.