The Appeal of 40 Year Mortgage Loans

Many people have turned to 40 year mortgage loans instead of using the traditional 30 year fixed-rate mortgage. These loans are still not as popular as 30 year loans, but they do have some attractive features. Here are a few things to consider about the appeal of a 40 year mortgage loan.

Smaller Payments

One of the most appealing features of 40 year mortgage loans is that you can get smaller mortgage payments. If you are on the verge of being able to afford a particular house with a 30 year mortgage, by getting a 40 year mortgage, you will get a payment that you can afford. When you take the same amount of money and amortize it over an extra 10 years, this will have the effect of lowering your monthly payment. When the biggest issue for you is getting payment that you can afford, a 40 year mortgage may be exactly what you are looking for.

Bigger House

Another potential benefit of getting a 40 year mortgage loan is that you can increase the amount of house that you can buy. Instead of worrying about getting a lower payment, you could keep the same payment and just increase the loan amount. This will allow people who want to get a bigger house the opportunity to do so. Instead of having to settle for a house that you don't really like, you could instead get a 40 year mortgage. This might be the difference in getting the house that you will truly enjoy. Since you are trading a big portion of your paycheck every month for a house, you might as well get a house that you really enjoy living in. 

Longer Tax Break

One of the biggest advantages of homeownership is that you get to write off the amount of interest that you pay on your mortgage every year on your taxes. When you are a homeowner, this can be a significant source of tax relief for you. It can lower your taxable income by quite a bit every year. With a 40 year loan, you will be able to take advantage of this tax deduction longer.

With any mortgage, the majority of the tax break comes at the beginning of the mortgage term. At the beginning of the loan, the majority of your monthly payment is interest. As you continue to pay down the balance of your mortgage, you will be charged less interest each month. This means that your tax break continues to decline over time. With the 40 year mortgage, you are paying down the balance slower than you would with a 30 year mortgage. This means that the larger tax break that you are used to will last a few more years with this type of mortgage. While it may not seem like a big deal, any money that you can save on your taxes can be very helpful.

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