Pay The Loan

If you live in California then likely you are also aware of a new type of mortgage never offered before: a 50 year mortgage loan that is fixed for the life of your home ownership. Yes, the newest twist in home ownership has arrived, but it is currently only available in one state. Will that change? Yes, if current home buying conditions remain the same. Read on to learn what set's this type of loan apart from the pack:

Extra Long Term: Never before has a mortgage loan of this length been offered before. Previously, a 40 year mortgage loan started to appear on the radar but nothing this long. Quite frankly, the loan is 20 years longer than the conventional fixed rate loan of 30 years; quite an extension for some people!

Lower Monthly Payments: The advantage of this type of loan over similar loans is obvious: your monthly loan payments are less than what you would pay for a 40 year loan which is less than what you would pay for a 30 year loan. So, that home that was certainly out of reach with a 30 year loan, a struggle to make with a 40 year loan, is not do-able with a 50 year mortgage loan.

Big Interest Payments: You'll pay a lot more in interest with the longer loan; in fact the first ten years of your loan will be mostly devoted toward paying off interest with only a small amount of money working toward reducing the principle. You'll see big gains at the end of your mortgage term if you live that long!

Buy Long, Refinance Later: Off course, getting a 50 year mortgage loan doesn't obligate you to keep that loan for that long. You may eventually sell your home and take the proceeds from the sale to buy another home. Or, you may decide to refinance especially when your financial picture brightens and you find that you can afford bigger payments.

Of course the question people ask about long term mortgages of this type is what market conditions brought about these types of loans? Well, the California market has been red hot for some time and beyond the reach of average buyers. To keep the market strong, another mortgage had to be created, thus the 50 year mortgage loan. Will the loan gain in popularity beyond California? Well, if there is a demand it will…plain and simple.