40 Year Mortgage Interest Rates

Something you may not have heard of when searching for home mortgages is the 40 year mortgage. It is certainly not as popular as the 15 or 30 year mortgage, but it does exist. People may choose this term so their monthly payments will be as low as possible. This might mean they can buy a larger home. There are both advantages and disadvantages to this type of mortgage. One advantage is of course the low payments. If you find a house you want and the 30 year mortgage payments are too high, you may be able to afford the house with a 40 year mortgage.

Some disadvantages include 40 year mortgage interest rates. Because the term is longer, the rates are going to be higher which means you pay more in the long run. Also, equity is accumulated more slowly. The actual rate will vary depending on the amount of the mortgage, your credit, the lender you choose and other factors. You should know that not every mortgage lender offers the 40 year mortgage, and even fewer offer a fixed rate on this type of loan.

The most common scenario is for a lender to offer 5 years of fixed rate payments and 35 years of adjustable rate payments, which is known as an adjustable rate mortgage or ARM. The homeowner can always refinance in the future if they feel it would be in their advantage to do so. There are quite a few reasons to refinance. One would be if your credit rating went up and you could acquire lower rates, or when housing rates dropped. If you decided you wanted to shorten the term of your mortgage, refinancing can do this. You can also change the type of loan you have from adjustable to fixed and vice versa.

For first time homebuyers who find they cannot quite afford the home they want, a 40 year mortgage might be a good first step. They can enter into home ownership with affordable payments, and as their finances improve and equity is accumulated they can choose to switch to a shorter mortgage term such as 30 years. Many experts advise homebuyers to live within their means and choose a mortgage that is best suited for them and their budget rather than automatically going for the longest mortgage possible in order to get a more expensive home.

As you can see, there is a lot to consider including 40 year mortgage interest rates. You should speak with a financial advisor or lender before making a final decision. By shopping around, you may find a 30 year mortgage you can afford, or a 40 year mortgage with comparatively low rates. Every situation is different, so what works for one homebuyer may not be the best course of action for you.