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Is a 50 year mortgage the right way to go?
A 50-year mortgage might sound like a way to make your monthly payment lower, but is it actually a smart financial move? In this clip I explain my thoughts on longer-term mortgages and what buyers should really consider before committing to a loan that stretches out that far. The goal when buying a home isn’t just getting the lowest payment possible — it’s building equity and protecting your long-term financial future.
By adding 20 years to your mortgage from a traditional 30 year mortgage that’s an additional 20 years of interest you’re paying. Let’s break this down and show you the difference.
All the examples I’m going to use will have the sale price of $400,000, putting $14,000 down or 3.5%.
- With a 30 year mortgage you will pay a total of $377,000 in interest over the life of the loan plus the principle bringing you to a total of $717,000
- With a 50 year loan you will end up paying $833,153 in interest. Adding that extra 20 years more than double s the interest you’ll be paying.
Now some people will argue that I’m not going to stay in the house for 50 years I just want to get a cheaper payment. So going with a 50 year mortgage if it’s available versus a 30 year mortgage your monthly payment will be less. But you’ll also pay less of the principal off unless you’re making extra payments towards it. Then when you go to sell you’ve not built up any equity and it’ll be very hard to take that equity out of the home and apply it towards a new home when you move.
If you’re thinking about buying a home and want to understand your options before talking to a lender, I’m always happy to help.
Text HOMES to 952-994-7204.
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