100 Year Mortgage

If I had this option, and closed on a house today and kept the loan until it was paid off, I would be 143 years-old. I just find this funny. Really. 

As of today there is no such program, but there is a 50 year program. So…is this a good thing? My stock answer: it depends.

Before the 50-year loan, there was (and still is) the 30-year fixed rate mortgage and its cousin the 15-year mortgage. For those who wanted to pay off their loan faster and pay less interest–a cost–over the life of the loan but have a higher monthly payment, there is the 15-year. For those who want a lower payment but will pay more interest over the life of the loan, yes, the 30-year. And shopping by interest rate alone? Big mistake, as the 15-year will have a lower rate but a much higher payment. So interest rate is deceiving here. 

So the 50-year mortgage allows you to have an even lower payment for a fully amortized loan. Again: compared to a traditional 30-year fixed rate mortgage, the rate for the 50-year will be higher but the payment will be lower, and if you were to keep the loan for 50 years the total interest that you would pay would be much greater.

Hope I can still blog when I am 143….

 

8 May 2007 | Interest Rate, Programs | Comments

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