Are Long Term Mortgages For You

Are Long Term Mortgages For You



Are Long Term Mortgages For You?
The various ways of​ getting a​ house these days has definitely become easier,​ along with the​ way that it​ can be paid back. Traditionally,​ a​ mortgage on​ a​ house meant a​ maximum of​ 25 or​ 30 years before amortization. New mortgages,​ however,​ are going way beyond the​ more traditional limits and are pushing it​ back to​ 40 and 50 years. Here are some things you​ need to​ know about long term mortgages.
Reduced Payments
Because the​ payments are now stretched out over a​ much longer period of​ time,​ this means that the​ monthly payment is​ also greatly reduced. This point is​ usually the​ main selling argument and it​ is​ a​ good one. if​ you​ are looking to​ reduce your monthly payments for some reason or​ other,​ then this may help you.
The Overall Costs Are Greater
Reducing monthly payments,​ however,​ are only half of​ the​ story. While it​ does free up some cash on​ a​ month by month basis,​ it​ also adds longevity to​ the​ loan. Longevity always means more interest much more interest.
Calculate Total Costs
When you​ actually are ready to​ consider what such a​ mortgage will cost you,​ you​ need to​ sit down with the​ details of​ a​ 25 or​ 30year mortgage,​ and compare it​ with the​ results. This would be even more important if​ you​ are considering refinancing an existing mortgage.
Advantages
A long term mortgage can be very handy under some circumstances. For instance,​ if​ you​ are planning on​ buying property with the​ intent to​ renovate it​ and then resell it,​ this type of​ loan would actually allow you​ to​ minimize your own expenses and monthly payments while you​ are fixing it​ up. Another situation would be when buying a​ rental property. While you​ have renters in,​ you​ pay extra on​ your monthly payments,​ and in​ those inbetween renters’ occasions,​ you​ just make the​ low regular payment. This type of​ loan also could allow you​ to​ get a​ larger house than you​ could otherwise afford.
Disadvantages
A long term mortgage can work against you,​ too. the​ added interest has already been mentioned. Another major consideration,​ though,​ should be the​ value of​ the​ house itself. Forty or​ fifty years down the​ road,​ what will the​ house be worth? Or,​ what will the​ economy be like or​ your health? While these are some ifs,​ and unknowable,​ it​ still should take up a​ moment or​ two or​ your thinking process. a​ short term mortgage lessens the​ risks simply because it​ is​ shorter. it​ also could free up money at​ the​ end of​ the​ mortgage term to​ use in​ more creative or​ needed ways when you​ reach that stage of​ life.
If you​ should decide to​ go with a​ long term mortgage,​ be sure to​ compare it​ to​ several other offers. This gives you​ a​ degree of​ flexibility as​ well as​ the​ opportunity to​ choose the​ best offer. Also,​ be sure that there are no early payment penalties so that you​ could pay it​ off early if​ you​ are able.




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