50 YR Mortgage Hits Lending Market
A: Buyers now have the option of taking out a 50-YR loan, should they decide to do so, offered by banks as an incentive for buyers to remain interested in today's national housing market. The 50-YR loan product will help keep monthly payments lower but will be adjustable in nature and will lower the amount of equity the borrower builds on a monthly basis.
Two issues to keep in mind: A borrower with the 50-year mortgage builds equity very slowly. And because rates on the loans are adjustable, a borrower's monthly payments could rise, the report said.Mortgage experts caution that the 50-year mortgage is best-suited for those who plan to stay in their home for about five years, while the loan's interest rate remains fixed, the report said.
UrbanDigs Says: No reason to take out a 50-YR loan product unless you are absolutely sure you are buying a house that you plan to sell or refinance in under 5 years. Since this appears to be a adjustable rate type of product, it is no different than a 5YR ARM or 7YR ARM except that the life of the loan is 50 years and not 30! This is simply an attempt by the lending industry to be more creative with their product portfolios to offer their customers since the feds began scrutinizing interest only and negative amortization loan products that are NOT in buyers best interests to take. Read my post titled "Regulations on Lending, You bet ya!".
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