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How Does A 30 Year Mortgage Compare With A 50 Year Mortgage?
(presented by www.refinance-refinance.net - mortgage lenders)



By Ben Afzal

Basics

A 30 year mortgage term is a traditional length for a mortgage.

The newly available 50 year term allows a borrower to stretch out the repayment schedule and lower their monthly payments.

In an environment in which rates have increased this is one way to get a lower monthly payment.

A 50 year term is not the same thing as a 50 year fixed mortgage.

A 50 year mortgage just means that the loan term is for 50 years. The loan may actually only be fixed for the first 30 years of the loan. You need to check your specific offer from the lender.

Figuring Out A 50 Year Mortgage Payment

A 50 year mortgage is a litlte bit more than 10% lower than the same loan size and interest rate on a 30 year loan term.

For example, a 30 year loan:

  • with a $335,000 balance
  • 6% interest rate
  • 30 year loan term
  • the regular monthly payment is $2,008
  • the interest only payment is $1,675
(Article continues below)

HOME LOANS ADVERTISEMENT

For a 50 year loan the following happens:

  • with a loan balance of $335,000
  • 6% interest rate
  • 50 year loan term
  • the regular monthly payment is $1,763
  • the interest only payment is $1,675

You will notice that the interest only payment is the same under both scenarios. This is because the interest only payment only factors in the loan size and interest rate, not the loan term.

As you can see a 50 year loan is much lower than a 30 year loan, but not as low as an interest only payment.

There are many free mortgage calculators available online to help you figure this out.

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This entry was posted on Thursday, October 12th, 2006 at 2:19 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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