40 year mortgages reduce monthly payments by stretching out the time that a borrower has to pay off the money back. However, there is a catch to this arrangement – a radically high interest rate on the loan. You will also be required to make a significant down payment. With this type payment plan the only real advantage is the lower payments for the borrower.
Not every lender will offer 40 year mortgages. Some will offer a slightly modified version of the 40 year mortgages with an adjustable rate. And of course another disadvantage of 40 year mortgages is that it will take much longer to build equity in the home. But once again the one advantage to this type of payment plan are the lower monthly payments for borrowers who can’t afford high monthly mortgage payments!
It is highly recommended that you consult a loan officer or financial advisor before signing up for this type of payment scheme.
