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Is there even such a thing as a 40 year mortgage loan? Are they even used much?
I know that a lot of people say that a 40-yr mortgage is not a good deal because you end up paying a lot of interest and the monthly payments are only slightly lower. But if that option was chosen anyway, would it be possible to refinance to a 30 year loan within the first five years so more equity can be paid in the house faster. In other words, is it necessary to keep the loan period to the 40 years even after refinancing? I would appreciate any help. Thanks
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Is there such a loan mortgage to refinance
how of much could i get on a
YEs, but if you need one you are buying too much house.
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LikeDislikeThere are a few around, but the payments are not much lower than on a 30-year mortgage, especially if written when interest rates are high. So they are seldom used.
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LikeDislikeYes there are 40 year mortgages as well as 50 year mortgages. They will become more and more popular as the price of houses go up.
The longer the terms of the mortgage the less the monthly payments. The interest rate normally have nothing to do with the terms of the mortgage.
Long long ago there were no 30 year mortgages. When they went into effect lots of individuals said why would a person want a 30 year mortgage as they are now saying about the 40 and 50 year mortgages.
Pretty soon the 40 and 50 year mortgages will become a staple item as the 15, 20, and 30 year mortgages are today. This product might determine if you can qualify for a mortgage and purchase a house or continue to rent.
There are a few companies that are using them, though all the lenders have them available for consumers, if they desire them. I persosnally think both the 40 and 50 year mortgages are excellent products.
As soon a the mortgage brokers and agents realize this is an excellent tool they will be better of and able to offer their clients a quality product that will put them in a house they can afford, instead of forcing the 30 year down each client’s throat.
I hope this has been of some use to you, good luck.
“FIGHT ON”
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LikeDislikeThere are 40 year loans, including conforming loans. The longer the loan term the lower the payment – but also the more interest you pay and the slower (obviously) that you pay off the principal.
Usually, there is not a significantly lower enough payment to justify moving from a 30 to a 40 year amortization period.
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LikeDislikeYes, there are 40 year loan programs available. I have never done one for my clients because there is not a significant change in the payment to justify adding 10 more years to their term.
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LikeDislikeYes. The 40 year is becoming a more popular product these days. The difference between the 30 year and the 40 year are not huge, but there is a difference. If you plan on staying in the home for the full term, I would go with the 30 year or even less. However, if you are only going to be in the home for a short amount of time, finance it for as long as the bank will allow. The nice thing about the 40 year is that it gives you the security of knowing your rate is fixed while giving you some savings at the same time, unlike an adjustable that is only fixed for a period of time. Below is an example of the 40 year vs. the 30. you can judge for yourself if it’s for you or not based on the amount of time you’re planning on being in the property.
Example:
300k loan amount at 6.75% over 30 years = 1945.79 pmt (PI)
300k loan amount at 6.75% over 40 years = 1810.07 pmt (PI)
The difference in this example is 135.72 per month.
I hope this helps, and good luck.
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LikeDislikeYes you can. However if you are otherwise happy with the current terms of the loan, you can make extra payments against the principal of the loan. You can do this without having to refinance. Be sure to send these extra payments as a separate check with ‘principal’ printed in the memo field. Otherwise they will just apply it to your escrow account.
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LikeDislikeAs long as your credit allows, you can refinance. Just make sure there isn’t an early payoff penalty. Some have an early payoff penalty that can be up to 5 years.
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LikeDislikeSure You can re-finance but, there will be charges involved. Just like when you first financed. Call a loan institution to find out more.
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LikeDislikedon’t see any reason why you can’t as long as you can afford to pay for the cost of refinancing. you have to shop around for better interest rate than what you’re currently holdong with your current mortgae now.
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LikeDislikeThere are a few possibilities. You can do as you say and refinance in a few years – but you will only want to do that if interest rates have gone down. In that case you would want to refinance even if you weren’t looking to change the term. There are costs associated with refinancing, so you can’t do it frequently, but time it right and you can end up in a really good mortgage.
But… You are always allowed to prepay principal on a mortgage. You can take out a 40 year mortgage and as long as you don’t have the cash you just make the regular payment. When you are ready to pay on a 30 year schedule just calculate the difference in payment and send the extra every month – ALWAYS with a note that the extra is to be applied to the principal.
The easiest way to play with the numbers is to learn a spreadsheet program – like Microsoft Excel has the @pmt() function that will help you understand it all. Short of that I’m sure the bank would be willing to answer questions like, “I want to be paid off in 30 years, how much extra principal do I need to send every month.”
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LikeDislikeYou can refinance to any loan term that you want, but if the rate on the 40-year paper is around the market rate for 30-year paper when you’re ready to refi, you’d make out better just by upping the amount of your payments and keeping the 40-year note.
You can pay additional principal at any time, just include a note with your payment instructing them what to do with the extra money, i.e. apply it to the principal. This way, you avoid the cost of refinancing.
If you are expecting to re-fi, just make sure that your loan doesn’t have a pre-payment penalty or that you wait until it makes financial sense to re-fi even with the pre-payment penalty factored into the costs.
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