The bad news is you’ll pay much more interest over the life of the loan, and it’ll take a very long time to build a meaningful amount of home equity. It could also make a real estate purchase slightly more affordable. Or it could be allocated toward a different investment or retirement account. That extra cash could be used to pay off student loans, credit cards, personal loans, and other higher-APR debt you may have. Let’s look at an example of a 40-year fixed mortgage:ģ0-year fixed: $1,703.37 fixed: $1,598.66 you can see, the monthly mortgage payment on the 40-year mortgage is roughly $105 less each month thanks to that longer period of time to pay it off. Instead of 360 months, you’re looking at 480 months. Well, the longer a mortgage amortizes (is paid off), the lower the monthly mortgage payment.Įssentially, payments are stretched out over a longer period of time. Especially since 30 years is already way too long. What’s the point of paying a mortgage for an extra decade? That sounds like a literal lifetime commitment. Okay, so we know the 40-year mortgage bucks the trend, and adds 10 years on to the standard mortgage term.
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