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What is a 40-Year Mortgage and When to Get One?

Funding a home through a mortgage in Hendersonville allows you to buy the house of your dreams. When looking for lending options, most mortgage brokers will automatically offer a 15-year or 30-year mortgage. So, most homeowners never hear about the 40-year mortgages available that may offer them some advantages.

What is a 40-Year Mortgage?

These loan products are fixed-rate mortgages that last up to 40 years. They typically carry higher interest rates but offer a chance to have lower repayments spread out over an additional 10 years versus a 30-year mortgage.  You will also build up equity in your home more slowly due to the extended term timeline.

When are 40-Year Mortgages Ideal?

A 40-year mortgage in Hendersonville is not for everyone, especially for those homeowners who don’t see themselves living in the new home for more than 5 or 10 years. Yet it may be the right loan program for you based on the following circumstances:

  • You’ve found your forever home as you don’t plan to move again
  • Need lower repayment options due to having a low income or job change
  • You want to qualify for a higher loan amount that offers lower payments
  • Plan to one day turn the house into rental property as you’ll use the tenant’s payments to pay off the mortgage

In addition, you can still pay off the mortgage amount sooner if your income improves. If the fixed-rate loan isn’t interest-only, some of your lower payment amount will go towards your principal. So, you aren’t just paying off the interest during the first 5 years.

If you are looking for a way to make homeownership more affordable based on your lower income, you may consider a 40-year mortgage. Contact MIG today for more information about your loan options.