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40 year mortgage loans

Most of the people out there think that 40 year mortgage loans are one of the latest developments in the financial market. On the other hand it should be noted that it has now been present since a long time and have been promoted by most of the financial lenders out there in the market. These loans have been present and continued to be promoted even during various special circumstances. Most of the financial experts criticized the 40 year s mortgage loan for a high rate of interest, on the other hand some agreed after having a look at the lower monthly payments that has to be made. This feature of 40 year mortgage loan makes it highly attractive amongst the homeowners having limited amount of time.

 

In the recent times it was witnessed that the lenders were pushing 40 year mortgage loans in order to help the borrowers survive the higher rate of interest. As noticed above 40 year mortgage loans help reduce the amount of monthly payments by stretching the time period of making the payment. While the extended period of loan provides a lot of convenience on the part of the borrowers, it should also be noted that these loans programs do not suit the requirements of everyone. The high rate of interest attracts a similar high interest bill over the entire life span of the mortgage loan. According to some of the financial experts lower monthly payment is not the only advantage of 40 year mortgage loans.

 

Additional purchasing power:

 

The borrowers are also provided with the option of selecting lower monthly payment or additional purchasing power. Thus, the borrowers who would like to prefer additional purchasing power for financial his purchasing needs 40 year s mortgage loans are the best suited ones.

 

Thus, a borrower who can spend $2,000 for monthly payments along with rate amounting up to 7%, $301,000 can be raised as a loan. If the same rate is lifted to 8% the borrowing power reduces to $272,000. On the other hand if the term is raised to 40 year s, $288,000 can be raised leading to a saving of 2 grand per month.

 

Longer period for building equity:

 

This is one of the biggest drawbacks which come in the way of 40 year mortgage loans. It should be noted in case of a $150,000 mortgage loan at 8% for 30 year s, somewhere around $100 goes towards reduction of the principal amount from the $1,100 monthly payment. On the other hand this amount reduces to merely $42 when the time span is increased to 40 year s.

 

Thus, while the selecting a 40 year mortgage loan plan it is always advise that the borrowers take into consideration the above stated benefits and drawbacks. Taking help of financial experts in selecting the right 40 year mortgage loans plan is also very necessary and important. According to some experts 40 year mortgage loans are very suitable for the first time home buyers as by time their salary is also bound to increase.

 

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