Real Estate Investing Realistically

A new 50-Year mortgage has debuted in California. For home buyers are trying to buy more house with less money, this is another option. Interest only loans and ARMs have been popular lately for people who are looking to lower their monthly payments. There is however a big downside to these mortgage: a higher total cost. From an article at Bankrate.com:

For a 30-year loan of $300,000 at 6.5 percent, principal and interest cost $1,896.20 per month. A 50-year loan for the same amount and at the same rate costs $1,691.15 per month in principal and interest.

The 50-year loan costs $205 less per month, but the payments stretch out for 20 years longer and will cost a total of $332,058 more.

This does not sound like a great option for me. If you are stretched that thin, I think you should be looking for a more affordable house, not a short term solution that will end up costing you in the end.

Filed by Webmaster at 3:20 pm under Real Estate Investing
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