The Pros and Cons of the 50-Year Mortgage
Want the skinny on the newest mortgage option?
The pros and cons of the 50-year mortgage:
Pros:
Fewer monthly payment.
Example: on a $250,000 mortgage at 7 percent, monthly payments on a 30-year
mortgage would be $1663. On a 50-year: $1504.
You avoid the risky interest-only and payment-option adjustable rate mortgages, and the dreaded negative amortization.
You can buy a bigger, newer or more expensive house for the money than you could otherwise afford.
Cons:
You build equity slowly—very, very slowly.
If you do stay in your home for the full 50 years, and if you’re like half of all first-time home buyers who are 32 years old or older, you’ll be in your 80s by the time you pay your mortgage off, assuming you haven’t refinanced. And the life expectancy for Americans is currently 77.9 years.
Over the life of the loan, you’ll shell out $652,532.68 in interest. On a 30-year mortgage, you’ll pay a little more than half that at $348,772.25.