Is a Fifty-Year Mortgage a Good Idea?
With more and more homebuyers looking for ways to get more house than they have money for, lenders have been happy to oblige their needs. In addition to interest-only loans, now homebuyers can look to a fifty-year mortgage for their financing needs. Those who don’t like the idea of having all of their mortgage payment going towards interest with an interest-only mortgage may be more inclined to spread their mortgage payments out over fifty years if it means they can get a bigger and better home.
The Pros and The Cons
While some homebuyers are jumping up and down because a fifty-year mortgage will let them get a home they couldn’t otherwise afford, many others are raising an eyebrow and asking if a fifty-year mortgage is really a good idea. The truth is, there are pros and cons in the world of the fifty-year mortgage and deciding whether or not a fifty-year mortgage is right for you is a matter of evaluating the pros and cons carefully.
If you are buying a home that you plan on living in for the rest of your life, a fifty-year mortgage probably isn’t your best bet. Not only will you be making payments until you’re well into your senior years, but you’ll be spending hundreds of thousands of dollars more on your home than you would with a thirty-year mortgage.
Let’s say you’re thirty years old when you’re buying the home and you’re paying about three-hundred thousand dollars at a rate of six percent. If you take out a fifty-year mortgage you’re going to be paying on that loan until you’re eighty years old and you’ll be throwing away about three-hundred thousand dollars that you would have saved had you taken out a thirty-year mortgage. Is a mortgage payment difference of less than three-hundred dollars a month really worth that? Probably not.
Short Term Living
On the other hand, if you only plan on living in the house for five or six years and you want to get the best house you can possibly afford, a fifty-year mortgage may be your best bet. Since you’re not in it for the long haul, you won’t really be affected much by the difference in the length of the loan.