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Why Take A 50 Year Fixed Rate Mortgage At All?

By Kevin Landis

Traditionally, mortgage lenders and borrowers have preferred mortgages that have amortization schedules ranging from 15 to 30 years. While paying off a mortgage faster has its advantages, there are advantages to getting mortgages with much longer amortization schedules. Even the new 50 year fixed rate mortgage has advantages.

It Offers the Lowest Payment

The first reason why you may want to take a 50 year fixed rate mortgage is because it offers the lowest possible payment. Since a 50 year mortgage is paid off over a much longer period of time, your monthly payment will be lower. For example, if you have a $200,000 loan and a 6% interest rate, your payment will be $1,200 per month with a 30 year mortgage and $1,050 with a 50 year mortgage.

You Can Purchase A More Expensive Home

The second reason why you may want to take a 50 year fixed rate mortgage is because it allows you to purchase a more expensive home. If you can afford a $1,200 per month payment and are getting a 6% interest rate, you will only be able to afford a $200,000 mortgage. With a 50 year mortgage, you could afford a $230,000 mortgage.

You Will Keep the Mortgage For a Long Time

The third reason why you may want to take a 50 year fixed rate mortgage is because you plan on keeping the home a very long time. If you plan on refinancing your mortgage, or selling your home within the next 5 to 10 years, a 50 year mortgage will be disadvantageous because you will repay very little of the loan balance. However, if you plan on staying a long time, a 50 year mortgage may be ideal.

Related posts:

1. Is a 50 Year Fixed Mortgage Really a Good Idea?
2. What Are The Advantages Of 15 Year/30 Year Mortgage Loan Terms?
3. Why Should I Get A 30 Year or A 15 Year Fixed Mortgage Rate?
4. How Can I Turn My 30 Year Fixed Rate Mortgage Into A 15 Year Fixed Rate?
5. Should I get a 30-year or a 15-year fixed mortgage?