The 40 Year Fixed Mortgage - Current 40 Year Mortgage Rates

With the jump in housing prices recently, a new loan term was created a few years ago to make monthly payments more affordable for home buyers. It's called the 40 year mortgage. What are the current 40 year mortgage rates and is this loan right for you?

The average interest rate for a longer mortgage is just a little higher than it is for a 30 year fixed. You can expect to secure a rate of about 6.25%. The difference a 40 year loan makes in your monthly payment is significant. It can lower it significantly despite the higher rate of interest.

For example, based on a loan amount of $200,000, your payment with a 30 year loan would be around $1200 a month. With a 40 year, your payment would be about $1120 a month.

Keep in mind, however, that the amount of interest paid on the forty year loan will be much, much higher that the amount paid on the thirty year. If the borrower were to keep the loan all the way to term, the interest paid on the forty year would be $336,000. The interest on the thirty year would be $231,000.

This loan is great for people who need a lighter monthly payment for a little while, anticipating more income coming. They can secure the forty year and then refinance it at a lower rate once the extra income comes in.

The forty year fixed loan is also great for people who are savvy investors and have a plan to make more money with the money they save on the monthly payment.

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