Is there a 50 year fixed rate mortgage?
Answer:Yes, there is. The 50 year fixed rate mortgage has recently sprung out of nowhere and seems to be a feasible way to approach homeownership for high cost area residents. For example, in California a 50 year fixed rate mortgage perhaps will become the hottest buy - it costs as much as rent and you acquire equity in a real estate market where rents and house prices can only go up. First-time homebuyers can be particularly happy with this option given that more than 20% of California mortgages are already 40-year FRMs.
However, the 50 year fixed rate mortgage will be priced in a way that will make the monthly savings only about $90 compared to having a 30-year fixed rate loan.
Why take a 50 year fixed rate mortgage at all?
Well, savings are not the best reason to take a 50 year fixed rate mortgage. Rather, it is the chance of building equity - no matter how slow - instead of paying rent. Also, it maximizes cash flow and people could always refinance the 50-year fixed rate mortgage.
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