40-Year Mortgages Or Interest Only Loans?
Written by on September 25th, 2005 in General.
Like interest only mortgages, the 40-Year Mortgage is ideal for borrowers who face affordability issues and think homeownership is beyond their reach. First-time home buyers, looking forward to a time when their incomes may increase, or those living in high-cost areas (California, Arizona, Nevada, etc.) seeking more manageable monthly payments may find this longer amortization schedule more suitable to their needs. In addition, the fixed-rate option which most interest only mortgages don’t offer, may appeal to financially conservative borrowers who prefer, or must have, lower monthly payments along with the stability of a fixed-rate, fully amortizing mortgage.
For a borrower who has not been able to qualify for an interest only mortgage, the 40-Year Mortgage may be a very viable alternative. Like an interest only borrower who desires lower monthly payments, a 40-Year Mortgage borrower, by amortizing payments over 40-years rather than the standard 30-year term, will also enjoy lower monthly payments. 40-year mortgage borrowers, also like interest only borrowers, will find this mortgage helps address affordability concerns, and may make it easier to qualify for a mortgage.
For buyers who wish to increase their purchasing power, the lower payments of the 40-year term will help borrowers qualify for a larger loan amount than the 30-year fixed rate would allow.
And, for borrowers who have other financial obligations which bear higher interest rates, or who would like to optimize an investment strategy, the 40-year Mortgage, like an interest only loan, offers borrowers a way to use their mortgage as part of an overall financial management strategy. The borrower can utilize monthly payment savings to pay off higher cost debt, or invest the savings elsewhere.
Summarily speaking, the 40-year Mortgage compares favorably to the increasingly popular interest only mortgage, with some borrowers finding it easier to obtain. Mortgage Match is arguably the Net’s “Number One” destination for borrower’s seeking interest only mortgages, but its richly experienced Loan Consultants are equally adept at successfully assisting borrowers to obtain 40-year Mortgages as well.
A fast and free preapproval will allow you to evaluate and compare what mortgage is best for you. To get preapproved, simply click here.