| ||
|
|
|
|
|
| ||
|
|
|
|
|
40-Year Mortgages: An Alternative to Interest-only Loans?
Interest-only loans are quickly becoming a mainstream loan product. Borrowers who were initially turned-off by the perceived risk associated with an "interest-only" loan are now starting to see the benefits: Lower payments, less money tied up in equity, more flexibility, etc. For the savvy borrower, an "interest-only" loan can be an important component to an overall financial plan -- allowing them to divert principal payments to other financial goals. "Interest-only" is typically an option only available on adjustable rate mortgages (although some lenders are now offering this option on 30-Year Fixed Loans). Borrowers who plan on keeping the loan for a long period of time and are uncomfortable with a loan product that has an adjustable rate component, may be interested in the 40-Year Fixed Rate Mortgage. (Note: Some lenders do offer a 40-Year term on their adjustable rate mortgages) The more flexible underwriting guidelines of a 40-Year mortgage may also attract some borrowers who are interested but do not qualify for an interest-only loan. A 40-Year Mortgage is exactly as it sounds - a mortgage that is re-paid over a 40-year term. Due to a longer repayment period, 10 years more than the standard 30-Year Mortgage, the monthly payments are lower. Until recently, these loans were difficult to find. Fannie Mae has now announced they will begin purchasing these loans from lenders which should increase their availability. Let's look at the numbers: For a $250,000 loan with a fixed interest rate of 5.75% and a term of 30 years, the monthly payments would be $1,458.93; but a borrower could save $83.40 a month by taking out a Fixed 40-year mortgage. Even at a higher interest rate of 6.00%, the monthly payments would be just $1,375.53. The monthly savings comes with an increase in overall interest: If a borrower were to keep the Fixed 40-Year Mortgage for the entire term and make the minimum monthly payments, they would pay approximately $135,000 more in interest. 40-Year Mortgages may be attractive to those borrowers uncomfortable with adjustable rate periods or who have difficulty qualifying under the stricter guidelines of an interest-only loan, however, it is important to understand the impact a 40-Year term will have on the overall cost of your loan. As always, it's best to consult with your trusted loan professional. They can help you understand your options and determine which loan product is best for you. Chris Rocks is a successful Mortgage Consultant and writer based out of Chicago, IL. Website URL: http://www.loansbyrocks.com Contact Email Address: chris@loansbyrocks.com
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
The Power of a Home Equity Loan to Pay Down Debt Households across the country are finding themselves in a similar situation. They lack the financial funds to make the necessary changes to their home and need to find a way to fund upgrades and eliminate debt. Guide to Remortgages Here is a useful guide to remortgages. What is a remortgage? A remortgage is when the terms of the original mortgage are renegotiated, and usually means that the borrower increases the amount that they are borrowing, which is often possible due to a rise in the value of the property. Bad Credit Refinance Loans - Finding a Good Lender Finding a good lender to help you with refinancing your home loan can be tricky if you have bad credit. There are plenty of predatory lenders out there who would like to take advantage of you with excessively high interest rates and fees. Shopping for A Mortgage? Do Your Homework First If you happen to be shopping around for a mortgage, it is very important that you first take the necessary time to do your homework.When I say homework, I am talking about research. Types of Home Equity Loans There are at least two types of home equity loans.The first is a term or closed end loan and the second is basically a line of credit. Ending Your Private Mortgage Insurance Early Private mortgage insurance, or PMI, is the safety net of the lender. PMI benefits lenders because it guarantees payment on the balance of loans not covered by the sale of foreclosed properties. Mortgage After Bankruptcy Most people probably assume that obtaining a mortgage to purchase a home, refinance or to consolidate debt after a bankruptcy is out of the question. In fact, many people are able to obtain these mortgage services, even 1 day after a bankruptcy discharge in some cases. Types Of Home Equity Loans There are two broad types of home equity loans:Term loans: Home equity loans of a fixed nature are also called second mortgages. For example, if you have bought a home for $10,000, and made a down payment of $1,000, and taken a mortgage for the rest and have managed to repay another $2,000, then you can apply for a home equity loan of $3,000. Home Mortgages: Think Before You Borrow In today's overheated housing market, lenders are making it easier and easier to get a mortgage. For example, some lenders have lowered the credit score needed to qualify for a mortgage. Home Mortgage Loan Refinancing Online - 3 Tips on Refinancing Your Home When refinancing your home, it's helpful to know a few things about refinancing. When you refinance, you usually pay off the old loan and sign for a new loan, whether you are refinancing your 1st mortgage, second mortgage or home equity loan. Keep Your Eye Focused on Treasury Bond Rates To Adjust Your Current Mortgage Rates Mortgage rates typically are based off the current rates of treasury bonds. Most lenders set their long term mortgage rates in line with 10 and 30-year treasury rates. Seniors Can Use a Reverse Mortgage to Fund Annuities, Investments, and Insurance Policies For many seniors in or entering retirement, the prospect of purchasing long-term care, investments or annuities can be cut short by a lack of retirement income. Statistics show that 3 out 4 seniors will have to lower their current standard of living during retirement. 5 Steps to Getting on Top of your Mortgage Getting on top of your mortgage so you can pay your loan off faster and potentially save thousands of dollars on your home loan is possible with a plan and consistent effort. There are mortgage reduction strategies that you can put into place that will ensure that your loan is paid off more quickly without putting a huge strain on your current budget. What On Earth are Home Equity Loans? Home equity loans are one of the most common types of financing for doing improvements on your house. These loans are not necessary used for home improvements but can also be used to simply obtain extra cash. Buying a House or a Home? A house is just that, a house, until someone lives in it. That's when it becomes a Home. 5 Tips for Savvy Use of Your Home Equity Line of Credit Tapping your home's equity to pay college expenses, consolidate credit card debt or even to buy a new car or boat is common place. Many economists attribute the additional buying power afforded consumers through home equity debt as a primary reason the nation's economy has been able to emerge from the recent recession. Home Equity Loan or Home Equity Line of Credit - Which is right for you? The most common type of home equity loan is the term loan. This loan is set for a fixed amount of time, anywhere from five to fifteen years. Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home Today! So you have been through a bankruptcy and surely have been told to wait at least two years before applying for a home loan. Waiting two long years without any guarantee of being approved for a mortgage after bankruptcy can be disheartening. Home Loans For People With Bad Credit - When you Should Wait and When You Should Get a Home Loan Home loans may seem like a bad idea for people with bad credit, but there are times when a home loan can help your credit score and your budget. To know if a home loan is best for you, consider factors such as your current financial situation, current rent payment, and future goals. Home Equity Loan - A Reverse Mortgage Could Provide a Comfortable Retirement! While only comprising about 1% of all mortgages, the reverse mortgage has gained in popularity in recent years. Federally insured since the late 1980's, the reverse mortgage allows owners of paid-off homes to borrow against the equity in their homes in the form of a lump sum, a line of credit, or in the form of monthly payments.
|
| Home | Privacy Policy & Legal Information | Contact |
