50-year mortgage?

We went to an open house this weekend just for fun since it was way out of our price range, but the agent there told us that there is now a 50-year mortgage available?

There were tons of people at the open house so we couldn't ask her many questions about the 50 yr mortgage, but what are the pros and cons to this? I know obviously it takes much longer to pay off your mortgage, but does it lower the monthly payments by a lot? Has anyone done this?

TIA!

Re: 50-year mortgage?

CON - Paying a mtg in your 80's

Re: 50-year mortgage?

I read briefly about this...I believe it makes your monthly payments less but the interest you'll pay over time is much more.

I bought Home Buying and Mortgages For Dummies...found them both very helpful. Highly recommend them!

Re: 50-year mortgage?

Message edited 1/23/2007 10:25:17 AM.

Re: 50-year mortgage?

MSN had an interesting article.

Here's an excerpt:

A 50-year loan has lower monthly payments, but the total cost is astronomically higher than that of a 30-year mortgage because you're stretching out the payments for two decades longer. It's impossible to guess how much higher because the rate moves up and down annually for the last 45 years of the loan.

But just for grins, let's compare a 30-year fixed-rate loan with a mythical 50-year fixed. For a 30-year loan of $300,000 at 6.5 percent, principal and interest cost $1,896.20 per month. A 50-year loan for the same amount and at the same rate costs $1,691.15 per month in principal and interest.

The 50-year loan costs $205 less per month, but the payments stretch out for 20 years longer and will cost a total of $332,058 more.

An interest-only loan at 6.5 percent would cost $1,625 per month for the first 10 or 15 years, and then the payment would jump.

Re: 50-year mortgage?

OMG!

Re: 50-year mortgage?

Just a simple calculation:

A $350,000 mortgage at 6% for 30 years (360 months) would be a monthly payment of $2,098.43, which is $755,434.80 worth of payments at the end of your term.

A $350,000 mortgage at 6% for 50 years (600 months) would be a monthly payment of $1,842, which is $1,105,200 worth of payments at the end of your term.

That's a $349,766 difference!!

Message edited 1/23/2007 10:31:39 AM.

Re: 50-year mortgage?

40 years mortgages are becoming common- but 50 seems like way too much

Re: 50-year mortgage?

But, if you're not in the house for the life of the loan (say for 5-10 years) does it really make a difference if you go for a 30 or 50 yr loan.

Re: 50-year mortgage?

Posted by lorich

CON - Paying a mtg in your 80's

Re: 50-year mortgage?

Wow it really doesn't save that much on monthly payments... from what i've read so far from you guys it's not worth it, esp if we plan on living in one house for a long time.

Re: 50-year mortgage?

Posted by lorich

CON - Paying a mtg in your 80's

Re: 50-year mortgage?

Re: 50-year mortgage?

A $350,000 mortgage at 6% for 30 years (360 months) would be a monthly payment of $2,098.43, which is $755,434.80 worth of payments at the end of your term.

OMG - this is making me a little nauseous. So basically you are doubling the price of your house...

I know markets increase, but do you think most houses double (besides places like LI)?

Re: 50-year mortgage?

I wouldn't go for a 50-year mortgage--I'm not sure we could even get one since there is a very good chance DH and I will both be deceased by then!

I've heard negative rumblings about these, 30 yr. is a better way to go from what I can figure out.

I know it's really hard to not go after something you love, but sometimes that's the way it works out. There was one house DH and I were crazy about, but we figured out that we would not be able to take any vacations, save much money at all, or do much other than pay the mortgage. And the possibility of one of us losing a job really scared us. We decided to look at less perfect homes that are priced lower and have the peace of mind, but ultimately, the choice is up to the two of you.