New to the market is a 50 Year loan, this allows you to stretch out your payments over 50 years allowing for a more reasonable payment especially in areas of high market values.
50 year loans are generally considered a band aid type mortgage loan and meant to be used short term until either credit or income levels increase to a point where the borrower can qualify for a conforming mortgage.
Some people a shocked to hear that someone would commit themselves to a mortgage for 50 years. First, most 50 year loans have the same term (or duration) as a 30 year loan. They are just amortized over 50 years with a balloon payment. Second, most people pay off their loan either because they sell their home or because they refinance far before the 30 year term is due. Don't worry, you're not stuck in debt for 50 years.
50-year mortgages are attractive to home buyers who cannot qualify for the high payments of 30-year mortgage loans. Most of them have no intention of keeping these 50-year mortgages for the entire loan term.
A 50 year loan can help a borrower qualify for a more expensive house because the payments are lower due to the fact that they are spread out over a longer time period.
50 year mortgages are among the best solutions for very bad credit debt consolidation refinance loans. You can qualify for 50 year mortgages even with a credit score of 500, and once you have taken out the money to pay off your debts and spend some time repairing your credit, your score may increase by 100 points or more! And due to the 50 year amortization, this can often be done without substantially increasing your monthly payment.
The 50 year loan is a great alternative for people that don't qualify for Interest Only programs.
With a 50 year amortization you will still be making principal and interest paymemts, so you will be paying down your mortgage balance.
A 50 year loan may be necessary to help a client qualify for a mortgage loan. The lower payment on the 50 year loan can sometimes become the difference between qualifying and not qualifying for a home loan. You can always make extra payments towards the principal of your mortgage payment so that you can pay the mortgage loan off much sooner than 50 years.
Getting a 50-year loan is a perfect way to avoid an interest-only or payment-option adjustable-rate mortgages.
As the interest rates increase and the refinance market struggles you will see many different programs become available. The 50 year loan is a great example. Lenders still need to offer products that will generate business in a difficult lending environment. This product is one that will keep payments low and still charge a decent rate for the investors. Certainly there will be very few if any who actually stick with a 50 year loan till the end. Most will refinance in the future for a lower term.
A 50 year loan can give you the payment stability of a fixed rate amortized mortgage (paying off some principle) Byt with the low payment benefit of an interest only loan.