40 Year Mortgage the New Unacceptable Affordability
Downsizing, cutbacks and even going without are terms coining the Great Real Estate Depression. Now add a 40 year mortgage debt to the list. Are we ready to accept adding another 10 years of debt and interest payments in order to make buying a home affordable in the best states to retire? We were taught to payoff our mortgage debt faster, we need to make bi-weekly payments, utilize a 15 year mortgage or pay one extra payment each year.
How long will it take for the banks and mortgage brokers to sugar coat 40 year mortgages enticing borrowers to go deeper in debt for them to make a profit? From the bank's point of view, a $250,000 mortgage at 5% simple interest puts another $49,162 in interest in the bank's pocket by alluring you into a 40 year mortgage. Yes, borrowers can reduce their monthly payments by $136.56 per month by taking out a 40 year mortgage debt instead of a 30 year mortgage, but is it really necessary? We're not a fan of bank’s greediness as you can probably tell and we know we're not alone. On November 5th - Bank Transfer Day, people across America protested excessive bank fees moving their checking and savings accounts to local credit unions.
Before you get caught in this new 40 year mortgage reality, carefully consider the buying power you have today with the adjusted real estate market prices. A home which would have cost $500,000 in 2006, can be purchased today in the mid $200-300k’s in many popular master planned communities in the Southeast, new homes and re-sales. Use your buying power today and the skills of a knowledgable real estate broker to find a undervalued home. Don’t be penny foolish accepting 40 year mortgages sinking you deeper into mortgage debt. Better yet, pay cash if you can so you can enjoy a debt free retirement.
If you're in the market for a home, take the time to review real estate sales report for the two years prior understanding pricing movement. Study homes with the features and attributes you desire; the age of the home, bedroom count, baths and square footage. A real estate broker like myself can quickly help you, as we have these sales reports on file and carefully monitor these trends in the best states to retire. If you would have been happy paying $350,000 for a home in 2006, why wouldn't you focus on finding the same home today for $200,000, even if it takes you more time and effort? To us, using your buying power is better way to lower your monthly payments verses accepting a 40 year mortgage. We invite you to share your thoughts about how you feel about a 40 year mortgage, by leaving a comment.
If you would like our hot list of deeply discounted homes you may not find on MLS in one of the best states to retire, write [email protected] or call us toll free at 866.384.1799