The 40 Year Mortgage

What are the advantages/disadvantages to a 40 Year fixed mortgage. I was quotes rates on a 40 year the other day, and that was the first time any one has ever quoted me that kind of mortgage before.


It’s 40 Years.
The rate is a little higher than a 30 Year.
More of your payment in the inital years goes toward interest.
More interest is tax deductable.

If you make all of you payments as scheduled… odds are you are going to die before the mortgage is paid off.

Ha! You made me laugh there. Odds are I am going to die before any of my mortgages are ever paid off! :smiley:
40 Year Mortgages are usually less of a monthly payment though, right?
Do you think getting one would be a bad move if you are buying a property with a ton of equity in it to begin with?

Your payment will be a little less since you are amortizing the payment over 480 months.

Payment is not that much lower because the interest rate is higher.
It’s a push as far as I’m concerned. The tax benefits of a 40 year are better than a 30 year.

I just checked and found out that my payment on a 40 year would only be $44 lower than a 30 year monthly payment AND I would be paying $5000.00 more in interest.
Not worth it.


You are right! If it is all about payment/cash flow then it is the lowest payment. The only way that you would pay that $5000 is if you paid on the loan for 40 years :wink:

If you seriously look at all 20/30/40 year mortgages…You will not make all of those payments anyhow. You probably will at some point between now and the end of the term, sell, refinance, or payoff the loan.

I saw a study that showed a very miniscule percentage of people ever satisfy the terms of their mortgage.

Yeah. I can see how that study would prove true!
Most folks, like myself, don’t know a lick about mortgages when they are shopping around and end up with the wrong kind of mortgage.
Anyway, yeah for me it IS all about the cash flow right now, but with only a $44 a month difference, I think I can swing it. I am thinking the 30 year term would allow for faster equity gain.
Now, if the payment was like $100 difference, that would be a whole nother story!

I agree with you. For that difference it is not worth it.