What does 25, 35 and 40 year mortgages mean to me?
Basically it works like this. Your payment decreases as the number of years increase and the longer the mortgage the greater the interest paid.
Lower payments of a 40 year mortgage may help First time buyers qualify to buy a home. That may seem great when you are just starting out to buy a home but the interest paid over the years will also increase. Here is an example to explain what the difference.
Case A – $100,000 mortgage 5 year fixed 25 year mortgage at 5% interest rate – payment = $582
Case B – $100,000 mortgage 5 year fixed 35 year mortgage at 5% interest rate – payment = $502
Case C – $100,000 mortgage 5 year fixed 40 year mortgage at 5% interest rate – payment = $479
Case A Total Interest paid $74,482.96
Case B Total Interest paid $107,115.63
Case C Total Interest paid $129,829.71
So for a difference of $110 in monthly payments there will be a difference of almost $50,000 is added to the cost of your house.
Seek the advice of a professional lender for more details on how to best meet your needs and let me find a house that you can make a home.
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