Mortgage Refinancing The 50 Year Home Mortgage Loan

If you are in need of the lowest monthly payment possible for your mortgage, 50 year mortgage loans are an attractive alternative to interest-only mortgage loans. Before you commit to 50 year repayment (thats longer than most marriages) it is important to understand what you are getting into. Here are several tips to help you decide if a 50 year mortgage is right for you.

Mortgage lenders are always expanding their loan portfolios to remain competitive; 50 year mortgage loans are one such offer. Should you consider a 50 year mortgage? 50 years is a long time, and could be an expensive mistake if used for the wrong reasons. The main advantage of a 50 year mortgage is that your payment will be significantly lower than a traditional mortgage while still building equity in your home, unlike an interest-only loan. The bad news is that you will pay an extra twenty years of interest payments. Here are several more pros and cons of interest only loans.

50 Year Mortgage Refinancing Pros:

You will have a very low mortgage payment compared to traditional loan options.

A fixed interest rate 50 year mortgage carries significantly less risk than an Adjustable Rate Mortgage with the same payment amount.

Interest-only mortgages only offer lower payments during the interest only period, after that the lender will reset the loan and the payment will go up significantly. With a 50 year mortgage you can plan your budget around one lower mortgage payment.

50 Year Mortgage Refinancing Cons:

The Lower monthly payment amount tempts many homeowners into purchasing homes they cannot afford. If you purchase a home outside of your price range you may find that you are unable to refinance the loan later on. An extra 20 years of interest payments with no way out could be an expensive mistake.

Because you are paying for that extra 20 years your total cost for the loan will be significantly higher than a traditional 30 year loan. Because mortgage loans are front-loaded with interest you will pay the majority of this in the early years of the loan. If you decide to refinance the loan 10 or 15 years later youve wasted a lot of money making interest payments on a 50 year mortgage.

You can learn more about your mortgage options including costly mistakes to avoid by registering for a free mortgage guidebook.