Tags |
|
|
Links |
|
|
Atricle Dump - Is The 50-Year Mortgage For You?
Companies invest millions to create, design, fine-tune, build, promote and extend their brands. Think Nike, Virgin, Versace, Raffles, Amazon.All your investment brings customers to your door (or website) with expectations matching your promotional promise. But when customer meets company ‘face-to-face’, everything hinges on that critical moment.A friend recently moved to Singapore from Australia and went shopping for an appropriate wardrobe. I saw her several hours into the spending spree and heard her say, ‘I love Liz Claiborne, but E––T (a competing brand) can take their clothes and shove it.’ (Australians can be oh-so-del
30-years: $382,633.47
40-years: $543,057.81
50-years: $714,690.40
The huge interest-costs over 50 years surely seem formidable, but is that really the case?
There are several issues to consider.
If you can buy an appreciating property then a long-term loan may be advantageous when compared to the alternative: No financing. If you cannot qualify for other loan products because the monthly cost is too high or for other reasons, then 40- and 50-year financing may be attractive.
If you get a fixed-rate mortgage you have protection against rising interest costs. In effect, a hedge.
If you expect your income to rise in the future, a longer-te
Have you ever bought things on impulse? Are you really bad when in line at the store and those little impulse items get the best of you? Don't worry, it happens to us all. After all, that is why those items are there. When considering the purchase of a home, that last thing you should act on is impulse. This is a time that requires careful planning and the willingness to allow the process to take as much time as necessary. This is not to say that you should sit back and do nothing; quite the opposite in fact, there is a lot to do during this time. Rather, don't try to rush the process, when a complicated process gets rushed though, mistak
The 30-year mortgage that is now the gold standard of American home finance was once virtually unknown. In the early part of the 20th century most mortgages in the U.S. were "term" loans, mortgages that lasted just five years. Since most of the debt could not be repaid in five years, at the end of the term owners would go out and get replacement five-year mortgages.
This system worked fairly well until the 1930s. Then the Depression drove down employment levels and shredded property values. In the west, the Dust Bowl impacted many states.
But then a new idea arose. The just-formed Federal Housing Administration (FHA) said it would guarantee the repayment of 20-year loans if borrowers would pay insurance fees. Private lenders followed with their own longer-term mortgages and the result was that term loans largely disappeared from the U.S. marketplace.
Over time the accepted definition of "long-term" financing changed from 20 years to 25 years and then to 30 years. Forty-year mortgages have been available since at least the 1980s.
What's the attraction of long-term loans?
Fixed-rate, long-term financing represents stability. If times are tough you don't have to worry about qualifying for a new loan. And if rates are fixed, then rising interest levels are not a concern.
But longer-term loans also have another value: They may allow borrowers to qualify for more financing.
Suppose we want to borrow $300,000 at 6.5 percent interest. With fixed-rate financing, the monthly costs for principal and interest would be as follows:
Monthly Mortgage Payments: Principal & Interest
15-years: $2,613.32
20-years: $2,236.72
25-years: $2,025.62
30-years: $1,896.20
40-years: $1,756.37
50-years: $1,691.15 The list above plainly shows that the longer the term, the lower the monthly cost for principal and interest. The practical advantage of longer monthly payments is that borrowers can obtain larger loans. Compared with 15-year financing, using a 50-year loan would reduce cash costs by more than $900 a month in our example.
Monthly payments are not the only consideration, however. Borrowers should also look at potential loan costs. Because longer-term loans are, well, longer, money is outstanding for a greater period of time than with 30-year financing. The result is that potential interest costs increase substantially with time.
Total Potential Interest:
15-years: $170,397.98
20-years: $236,812.66
25-years: $307,686.45
30-years: $382,633.47
40-years: $543,057.81
50-years: $714,690.40
The huge interest-costs over 50 years surely seem formidable, but is that really the case?
There are several issues to consider.
If you can buy an appreciating property then a long-term loan may be advantageous when compared to the alternative: No financing. If you cannot qualify for other loan products because the monthly cost is too high or for other reasons, then 40- and 50-year financing may be attractive.
If you get a fixed-rate mortgage you have protection against rising interest costs. In effect, a hedge.
If you expect your income to rise in the future, a longer-te
What if everyone investing in the capitalization of American Business? What if it were easy? What if people could trade on eTrade without losing their shirt or going over board with day trading risk? What if everyone always made money in the market?What if there were less regulations slowing companies down and tying their hands behind their backs preventing them from making money? What if the wall street crowd was always on the up and up? What if investing were much simpler and did not have all those forms and rules?What if you could be more in control? Do you think more Americans would invest and save in 401Ks and mutual fu
But then a new idea arose. The just-formed Federal Housing Administration (FHA) said it would guarantee the repayment of 20-year loans if borrowers would pay insurance fees. Private lenders followed with their own longer-term mortgages and the result was that term loans largely disappeared from the U.S. marketplace.
Over time the accepted definition of "long-term" financing changed from 20 years to 25 years and then to 30 years. Forty-year mortgages have been available since at least the 1980s.
What's the attraction of long-term loans?
Fixed-rate, long-term financing represents stability. If times are tough you don't have to worry about qualifying for a new loan. And if rates are fixed, then rising interest levels are not a concern.
But longer-term loans also have another value: They may allow borrowers to qualify for more financing.
Suppose we want to borrow $300,000 at 6.5 percent interest. With fixed-rate financing, the monthly costs for principal and interest would be as follows:
Monthly Mortgage Payments: Principal & Interest
15-years: $2,613.32
20-years: $2,236.72
25-years: $2,025.62
30-years: $1,896.20
40-years: $1,756.37
50-years: $1,691.15 The list above plainly shows that the longer the term, the lower the monthly cost for principal and interest. The practical advantage of longer monthly payments is that borrowers can obtain larger loans. Compared with 15-year financing, using a 50-year loan would reduce cash costs by more than $900 a month in our example.
Monthly payments are not the only consideration, however. Borrowers should also look at potential loan costs. Because longer-term loans are, well, longer, money is outstanding for a greater period of time than with 30-year financing. The result is that potential interest costs increase substantially with time.
Total Potential Interest:
15-years: $170,397.98
20-years: $236,812.66
25-years: $307,686.45
30-years: $382,633.47
40-years: $543,057.81
50-years: $714,690.40
The huge interest-costs over 50 years surely seem formidable, but is that really the case?
There are several issues to consider.
If you can buy an appreciating property then a long-term loan may be advantageous when compared to the alternative: No financing. If you cannot qualify for other loan products because the monthly cost is too high or for other reasons, then 40- and 50-year financing may be attractive.
If you get a fixed-rate mortgage you have protection against rising interest costs. In effect, a hedge.
If you expect your income to rise in the future, a longer-te
Venture capital is a possible source of funding for new relatively unproven enterprises that appear to have promising futures. However, such money is often hard to come by.Be realistic in your quest for venture capital. Venture capital firms expect a business to be able to return their investment not only with interest, but with a large profit.Many venture capital firms are affiliated with banks, insurance companies, other financial institutions and large corporations.Some are owned by individuals or private groups of investors and a few are publicly held. Once you accept venture capital, you have relinquishe
But longer-term loans also have another value: They may allow borrowers to qualify for more financing.
Suppose we want to borrow $300,000 at 6.5 percent interest. With fixed-rate financing, the monthly costs for principal and interest would be as follows:
Monthly Mortgage Payments: Principal & Interest
15-years: $2,613.32
20-years: $2,236.72
25-years: $2,025.62
30-years: $1,896.20
40-years: $1,756.37
50-years: $1,691.15 The list above plainly shows that the longer the term, the lower the monthly cost for principal and interest. The practical advantage of longer monthly payments is that borrowers can obtain larger loans. Compared with 15-year financing, using a 50-year loan would reduce cash costs by more than $900 a month in our example.
Monthly payments are not the only consideration, however. Borrowers should also look at potential loan costs. Because longer-term loans are, well, longer, money is outstanding for a greater period of time than with 30-year financing. The result is that potential interest costs increase substantially with time.
Total Potential Interest:
15-years: $170,397.98
20-years: $236,812.66
25-years: $307,686.45
30-years: $382,633.47
40-years: $543,057.81
50-years: $714,690.40
The huge interest-costs over 50 years surely seem formidable, but is that really the case?
There are several issues to consider.
If you can buy an appreciating property then a long-term loan may be advantageous when compared to the alternative: No financing. If you cannot qualify for other loan products because the monthly cost is too high or for other reasons, then 40- and 50-year financing may be attractive.
If you get a fixed-rate mortgage you have protection against rising interest costs. In effect, a hedge.
If you expect your income to rise in the future, a longer-te
The Amount of Money and Its UsesDetermining the amount of money you are looking for is essential. This question is highly related to the use the money will have, but needs to be answered separately. You may need finance for many things: Buying equipment, hiring new staff, repaying debt, buying supplies for production, etc. The overall sum is the amount we are interested in, since if the amount is high enough, capital equity becomes an option. Otherwise you will be able stay on your own and resort to banks or private lenders as long as your company’s credit is good or you can provide collateral.Meeting Loan Requirements
Monthly payments are not the only consideration, however. Borrowers should also look at potential loan costs. Because longer-term loans are, well, longer, money is outstanding for a greater period of time than with 30-year financing. The result is that potential interest costs increase substantially with time.
Total Potential Interest:
15-years: $170,397.98
20-years: $236,812.66
25-years: $307,686.45
30-years: $382,633.47
40-years: $543,057.81
50-years: $714,690.40
The huge interest-costs over 50 years surely seem formidable, but is that really the case?
There are several issues to consider.
If you can buy an appreciating property then a long-term loan may be advantageous when compared to the alternative: No financing. If you cannot qualify for other loan products because the monthly cost is too high or for other reasons, then 40- and 50-year financing may be attractive.
If you get a fixed-rate mortgage you have protection against rising interest costs. In effect, a hedge.
If you expect your income to rise in the future, a longer-te
Suddenly you need cash, you cannot borrow it from your friends as the amount is bit higher, you do not have any property against which you can avail a fast secured loan. Then… is there any other option that you can opt for? Big question… isn’t it? Do remember that every problem has a solution, same as to solve your immediate cash crunch, the ultimate solution is fast unsecured loans.Fast unsecured loans- from the name, it is easily understandable that these loans are obtainable without pledging any property as security. Thus all sorts of borrowers, homeowners or tenants, bad credit scorers or good credit scorers all can apply for
30-years: $382,633.47
40-years: $543,057.81
50-years: $714,690.40
The huge interest-costs over 50 years surely seem formidable, but is that really the case?
There are several issues to consider.
If you can buy an appreciating property then a long-term loan may be advantageous when compared to the alternative: No financing. If you cannot qualify for other loan products because the monthly cost is too high or for other reasons, then 40- and 50-year financing may be attractive.
If you get a fixed-rate mortgage you have protection against rising interest costs. In effect, a hedge.
If you expect your income to rise in the future, a longer-term loan may allow you to buy now instead of waiting until you have a larger paycheck -- or waiting until prices are higher.
If you have a fixed-rate mortgage and have the right to prepay, in whole or in part, at any time and without penalty, then you have two attractive options: First, as your income grows you can make monthly prepayments that reduce the loan term and cut potential interest costs. Second, if rates decline you can refinance -- an attractive choice given that loans today can often be refinanced without the need for much (or sometimes any) cash at closing. (That's not to say there is no cost to close, but that you can finance closing costs and thus avoid the need to come up with cash.)
This is the biggie: The potential cost over 50 years is not a worry if you only have the loan for five years, 10 years or whatever. Would I get a longer-term mortgage? Actually, I have.
Long ago I bought an investment property with a 40-year loan. Since then rental rates have increased and the property has long thrown off a positive cashflow each month. No less important, the value of the property has increased some 400 percent -- value I would not have if the property could not have been purchased.
So the next time someone mentions a longer-term loan, don't laugh. Check rates, terms and conditions; it may well be that a long-term loan is what you need to get the property you want with the income you have now.
--------------------------------------------------------------------------------
Peter G. Miller is a syndicated real estate and personal finance columnist who appears 70 newspapers.
HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.articledump.net/article/145011/articledump-Is-The-50Year-Mortgage-For-You.html">Is The 50-Year Mortgage For You?</a>
BB link (for phorums):
[url=http://www.articledump.net/article/145011/articledump-Is-The-50Year-Mortgage-For-You.html]Is The 50-Year Mortgage For You?[/url]
Related Articles:
Earn Lots of Money through Auction Websites
Jeremy Jaynes - Portrait Of A Spammer
The Four Types Of Federal Student Loan Consolidation
Bookmark it:
|