I’ve been trying to sell a house for the past seven months, and after receiving an offer that was $57,000 less than the asking price, I’ve officially given up on trying to sell. For some reason, those who are trying to sell aren’t making contingent offers, and those who are looking to buy want something for nothing. Well, they’re not going to get it from me!
While sitting back and waiting for a miracle, but really not worrying about it, I happened to notice an ad on my Yahoo mail page. It was a mortgage ad, and I didn’t pay much attention – until I noticed the number 50 in bold print. The number practically jumped off the screen since it’s not a number I’m accustomed to seeing on a home mortgage ad, and I couldn’t help but think, so this is what they’re doing now. People are having a difficult time affording a standard 30 year mortgage for the expensive homes they think they must have, so now the option for a 50 year mortgage has become the answer to the American dream. I also couldn’t help but thinking how low can they go, and I’m not referring to home prices or interest rates. I’m referring to the steps home mortgage companies take to gain business. This may be the answer for some, but it’s certainly not a wise decision for everyone.
Is a 50 Year Mortgage a Wise Choice?
Depending on how old you are and how long you plan to stay in the home, a 50 year mortgage could be a wise choice. Consider how old you are right now, and add 50 years to your current age. Unless you’re 15 years old, never plan to retire, or you don’t plan on staying and investing in the home, a 50 year mortgage doesn’t sound like a wise decision – even if the payment seems reasonable. Keep in mind that taxes increase, and the affordable payment will no doubt increase over time. Personally I’d rather not have to worry about a home mortgage 50 years from now, but like many others, because of my age it probably won’t be an issue.
Realtors and mortgage companies will say you can always pay more on the principle to pay it down sooner, and this sensible suggestion makes the offer seem more appealing, but what are the chances you’ll add extra principle to each payment? It sounds like a good plan, but it doesn’t work for everyone. If you can afford to pay more each month, do yourself a favor and chose a mortgage plan that makes more sense.
Do You Really Need a 50 Year Mortgage?
Does a 50 year mortgage sound good because it will allow you to buy a home you otherwise couldn’t afford? Do you really need a more expensive home, or would it be a wiser decision to choose something realistically within your means? Personally I’d rather choose a moderately priced home for my current budget and a 15 year mortgage that will enable me to have my home paid for before retirement. Sure the monthly payment will be higher, but consider how much interest you’ll pay with that 50 year mortgage.
After considering those astronomical figures, ask yourself again, is a 50 year mortgage in my best interest or in the best interest of the Realtor and mortgage broker? I’ve dealt with mortgage brokers, and although they’re doing their job by offering the available options, they sometimes suggest mortgages that aren’t in your best interest in more ways than one. It’s up to you to exam all figures and options and decide for yourself. It’s your money, so don’t let anyone talk you into a lifetime of payments without first doing your homework. Be sure to read A Guide on Shopping for a Mortgage by Irene L. It will help you become better prepared to make a decision and avoid getting ripped off.
After owning 3 homes and knowing how the real estate game works, I’d never consider a 50 year obligation. Even if I was 20 years old and financially ready to buy a home, I wouldn’t choose this type of investment. Keep in mind, no matter what type of home mortgage you decide upon, it isn’t truly yours until the note is paid in full, and property taxes never end. Consider your options carefully, and don’t rush into a decision you might later regret.
Although renting isn’t for everyone, I have decided renting is the better choice for my family and I, and I plan on investing elsewhere. Never again will I commit myself to a home and a mortgage that I may or may not be able to get out from under should I decide it’s time to move on. I’d rather continue sipping my glass of iced tea while watching someone else take care of my rented property – indoors as well as out. Some may say all I’ll have left at the end of the year are rent receipts, but I feel I’ll have much more. Read my article, Is Renting Better Than Buying? After all, you can’t take it with you, and in reality we’re all renting anyway.