Scientists Guarantee Longer Life, Brokers Promise Longer Mortgage Plans
For 160 years, best-performance life expectancy has steadily increased by a quarter of a year per year, an extraordinary constancy of human achievement. Assuming the United States is able to overcome the obesity epidemic, life expectancy should continue to rise this century. Just a few short years ago, many people were amazed by the prospect of a 40 year mortgage.While 30 year mortgages had dominated the market for decades, the idea of being able to spread out your mortgage payments over forty years was just almost too much to comprehend. Now, there is the new 50 year mortgage and if the 40 year mortgage took the finance world by storm the is leaving many people speechless.
With life expectancy on the rise, longer mortgage plans are becoming more readily available. But, is a half century mortgage really a good idea? Well, there are certain some advantages to a 50 year mortgage. The most obvious advantage is that it allows a homeowner to spread out the cost of a home purchase and lower monthly mortgage payments. In housing markets where prices have skyrocketed this can be a major pro because it may make it available for individuals to purchase homes who might not have been able to do so otherwise.
There are also disadvantages to consider as well. When considering a 50 year mortgage it is extremely important to consider your age at the time of the purchase. For example, let’s say you’re 30 at the time your purchase the home. With a 50 year mortgage, your home would not be paid off until you’re 80. If you think you’ll still be able to meet those monthly mortgage payments long after the age by which most people have retired, this might not be a bad option. On the other hand, if you’re looking to be debt free by the time you retire, it’s best to consider another option.
Furthermore, the longer you draw out the payments on your home purchase, the more you’re paying in interest. This is why many critics of the 50 year mortgage are referring to them as interest-only loans. When you stop and actually look at the numbers, you’ll see that with this type of mortgage you’re paying a lot more in interest for your home that you would with any other type of home loan, even a 40 year mortgage. That’s money you might be able to put toward something else, especially if you’re looking ahead toward retirement.
Remember, lower monthly payments can be very tempting. But it is crucial to keep in mind the duration of time you are considering. Over 50 years, enough interest can accrue to double the cost of your home. A $300,000 home will cost $600,000 in you include 50 years of interest. This may or may not be a concern but it must certainly be a consideration.
Although life expectancy is on the rise, it is does not mean quality of life is also on the rise or guaranteed to remain constant. So, use caution when considering longer mortgage plans that may become increasingly burdensome as you age. A shorter mortgage plan will also mean earlier retirement and more freedom to enjoy yourself.
