Hail to the 50-year Mortgage … or Not?
February 6th, 2008We’ve seen the 30-year and even the 40-year mortgage. But now a new mortgage called the 50-year mortgage is being introduced to us by many lenders and credit companies such as Centum LaBuick.com Inc. They are the first to introduce the 50-year mortgage produce which is now available in Canada. Centum LaBuick.com Inc. says that it offers mortgage financing, home equity loans and debt consolidation especially designed for first-time buyers and those with good, bad or marginal credit. For more information visit www.labuick.com. Let’s take a look at the mortgage rates affecting Canadian Housing markets today. The astounding increase in prices in the Western markets of residential real estate correspond with the introduction of interest-only mortgages (meaning no principal payment for an introductory period) and mortgages with long amortizations such as 30 and 25 years. According to the Financial Post, the eroding housing affordability is making these mortgage products more enticing to get. For example, lets take a few numbers for fun and do a mini calculation so that we can compare and outline the interest paid on mortgage loans (Canadian Capitalist 2004-2007). Let’s take a $250,000 mortgage with a 6% interest rate under three different amortization scenarios respectively:
(15-year amortization) Monthly Mortgage Payments = $2,100
(25-year amortization) Monthly Mortgage Payments = $1,600
(35-year amortization) Monthly Mortgage Payments = $1,413
However, the total interest paid for each of these are as follows:
(15-year amortization) Total Interest Paid = $128,000
(25-year amortization) Total Interest Paid = $230,000
(35-year amortization) Total Interest Paid = $344,000
Lee Matthews -- Financial Concepts West
February 24th, 2008 at 7:32 pm
“According to the Financial Post, the eroding housing affordability is making these mortgage products more enticing to get.”
And if you reside in the US, a 50-year mortgage is even *more enticing* when you combine it with a program known as home equity acceleration:
More and more folks are using a Home Equity Line of Credit (HELOC) or a business-line-of-credit (BLOC) or personal-line-of-credit (PLOC) as an interest cancellation account to accelerate their home equity and payoff their home *years* sooner than listed on their mortgage amortization schedule.
Unfortunately, today’s Real Estate market means that folks can no longer count on appreciation to build home equity. Those who realize that they need to pay down their current mortgage debt are looking for alternate ways to aggressively (yet safely) build equity.
And they’ve discovered a perfect online system to do that; they can focus on their wealth accumulation goals while accelerating their equity simply by using an Advanced Line of Credit (ALOC) to ‘power’ the Money Merge Account™ financial solutions program.
A typical 30 year loan (of whatever type) can be paid down in 1/3 to 1/2 the time — it’s a great way to save *huge* amounts of income by eliminating a mortgage amortization front-end interest load. (On a million-plus dollar home, I’ve personally seen where the Money Merge Account™ program will save the homeowner $750,000 in interest charges!)
And the best thing – homeowners don’t have to refinance their existing mortgage or, in most cases, make any adjustments to their lifestyle.
It is unfortunate that most of us were never taught to follow three essential principles: (1) Avoid paying interest, whenever possible, (2) Use other people’s money, whenever possible and (3) Find and use a financial system that will guide you, especially if you have the tendency to go off-track. The Money Merge Account™ software and the program’s counselors use these principles to keep each homeowner focused on their wealth accumulation goals.
I’d be happy to provide further details…
Angie
March 12th, 2008 at 1:44 pm
I think the most important step is to be realistic in what you can and cannot do. I’ve seen so many first time home buyers jump into something they cannot afford only because they have big dreams.
Do your homework done first if you are thinking about taking out a loan or mortgage. The time spent looking into your options can save you a good deal of money later on.
Sterling Wong - MortgageDiaries.ca
March 17th, 2008 at 1:32 pm
I’ve heard of these longer am mortgages…Do I recommend them, No! We must learn what happened in the U.S. and take that information in pro-active manner. Longer am’s such as this one means that they can either a) get more of a mortgage and get a bigger house or b) get a lower monthly payment. Things to be aware of is the fee added on to this mortgage for going 50yrs. Is the fee worth it? Are you really struggling to make those monthly payments where you need to stretch the amortization out this long? Clients also have to remember that the longer the am the longer it takes to pay off and the more money they are loosing towards interest. Proceed with caution, although it is not recommended!
*Sterling
MortgageDiaries.ca
Alan Greenspin
March 4th, 2009 at 7:17 am
The is a great idea and should be done in the US. The program should be for exisiitng home owners which are underwater and thinking of walking away. They may stay with this option. New home buyers can come into the market place as well with a program like this. Genius!