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I have been looking for invesment properties, and I am very hesitant to use interest only loans or adjustable rate mortgages. My goal is to maximize cash flow with conventional amortization terms. I live in California and real estate prices are ridicuolously high so it's tough to get rental income that even comes close to covering a mortgage payment. I believe that equifax offers a 50 year mortgage loan, but I think you need to be certified to broker it, and I don't think my mortgage broker is certified. Is there a rate spread on these loans? Can I buy down the interest rate? Can I use these loans for duplexes or fourplexes?
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Consider some basic facts before you go exploring these new ‘creative’ options. First of all, you will generally pay 1/8 to 1/4 higher rate for the longer term on the mortgage. For the purposes of this discussion, let’s say it is 1/4 point. Since you commented about the loan sizes, let’s again work with a middle of the road number of a $500,000 loan amount.

Now, if you do traditional, conventional, 30 year financing on a $500,000 loan (let’s say your rate is 7.00%) your monthly payment would be $3326 and the loan would pay off in 30 years with a total payback of $1,197,543.

If you take a 40 year loan for the same amount and pay the .25% premium, you would lower your payment to $3198 (saving a whopping $128/month) your balance at the end of 30 years would still be approx. $272,430 and when paid off, the total of payments would be approx. $1,535,200. ($337,669 more in total payoff)

Finally, let’s assume you do a 50 year mortgage at the same 7.25%,(but be prepared for more of a premium for more of a specialized product) your monthly payment would be reduced to $3104 (now you are saving the bucks at $222/month) Your balance at the end of 30 years will still be approx. $393,000 (you will have paid $1.1 million in payments to reduce your principal by $103,000) and when the loan is paid off at the end of 50 years, you will have paid back an approximate total of $1,862,683.

Just some numbers to think about before you decide if this is really what you want to do.

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Thank you for your response and point taken. If you really consider the matter, 30 years is an arbitrary number. Most people stay in their homes (or keep their investment properties) for less than 30 years. I believe that a mortgage broker who markets loans like this would generate a lot of business. The cost of buying down an interest rate can be recovered, and therefore justify itself, depending upon how long the loan is maintained.
I never understood why people took 15 year loans when they could get a 30 year loan. With most financing, the mortgagee can make prepayments against the principal balance of the loan, at any time, and reduce the term of the loan. The only advantage of a 15 year loan is the lower interest rate, which can usually be achieved with a point buydown. I would rather pay a premium for a safer loan (lower monthly payment) than get a discount rate on a loan with higher payments.
It seems to me that the name of this game is cash flow. The lower you can drive down the monthly payments, the less likely it is that you will default on the loan, the more likely it is that you can find a tenant willing to pay a lower monthly rent, and the less you will need to earn to cover the whole thing, should you run into major construction costs or long term vacancies.
When your well runs dry, you will know the worth of water.
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if you buy a property with good cashflow, consider getting an interest only loan, and using all the cashflow, and even other income, to pay down the principal balance as quickly as possible. with interest only loans, your payment decreases everytime you pay toward principal, so you will pay it down more quickly every month. youll save a LOT of money that way, and will have the property paid off in 5-10 years, depending on your cashflow.

A home is a taxwrite off when you are working. But , let say you plan to retire in 15 years so you can have you house paid off, because you are more than likely will be on a fixed income.The 50 years is out because the lenders know that most of America will never have thier home paid off, so it comes down to affordability.