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Home >> Lending >> Home Mortgage
Re-instating 40 year Mortgages?
Why don't the banks start issuing forty year mortages so that people can afford to stay in their homes?
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 Adding ten years to a thirty-year mortgage adds huge lifetime interest costs to a loan, without lowering the monthly payment by much. For example, a $500,000 5% mortgage loan written for 30 years carries a monthly payment of $2,684.11. The same loan written for 40 years required a monthly payment of $2,410.98, just $273.13 less. While that might be enough of a difference to make the monthly payment a bit more affordable, it costs in the long run $190,993 more in interest for the extra 10 years of payments, with the total of the 480 monthly payments coming to $1,157,271.84! In addition, it might not be possible to write mortgage loans for forty years in some states.
Published on BankingQuestions.com 2/04/09
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