‘Own A California Home With 600 Easy Payments!’
The Housing Bubble Blog » ‘Own A California Home With 600 Easy Payments!’
“You, too, can own a home in California, with 600 easy monthly payments! Just get a 50-year mortgage! With any luck, you’ll have paid it off before you die!”“The 50-year mortgage won’t keep monthly payments very low because it’s not really a 50-year mortgage at all. It’s an adjustable-rate mortgage with a 50-year amortization (meaning it’s paid off after 50 years). The interest rate is fixed for the first five years, then moves up or down thereafter, meaning the monthly payment fluctuates as well.”
“‘The monthly payment on the 50-year mortgage would actually be higher than it would be on the 40-year, because the (higher) interest rate overwhelms the (longer) term,’ Kieth Gumbinger explains. Someone who takes out a 50-year, $300,000 mortgage will repay $300,000 in principal and $714,000 in interest over the life of the loan. That compares to $382,000 in interest for a 30-year fixed-rate loan, and $543,000 in interest for a 40-year fixed-rate.”
Wow… that’s a lot of interest payment! But you have to do what you can to buy a place in the Best Place On Earth(TM).
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