Will You Die Before You Own Your Home Outright?
According to Realtor.com calculations, a buyer purchasing a $400,000 home with 10% down at the current 30-year rate of 6.25% would pay about $250 less per month under a 50-year mortgage.
But the trade-off is steep. Over the life of the 50-year loan, total interest payments would reach $816,396, compared to $438,156 for the 30-year loan—a difference of $378,240, or 86% more interest overall.
Meanwhile, the 30-year borrower would have $42,308 more equity, equal to 10.6% of the home’s value.
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50 year mortgage article correct but ignores the fact that maybe the borrower can't swing more $,the benefits of tax writeoffs which decrease based on income, the
ReplyDelete50 year can be used in the near term if it benefits the customer and then replaced etc. etc.
Yes, that is the upside; a lesser payment. Getting into a home that you own that may appreciate is good. However, appreciate is the key. If a crash like 2008 were to hit again, you own a sinking ship and on the hook for 50 years. Few own a home for more than 10-20 years and the slow equity build is totally dependent on appreciation,
ReplyDeleteAnother point - the way standard deductions are going you may not always qualify for the interest tax write-off. The mortgage deduction has been under threat many times and could go away any time.
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