California 50 Year Mortgage

With the rising home values and affordability level at an all time low, the mortgage industry has come out with a new product, the 50 year mortgage. This is designed to make it easier to buy homes in California. A 50 year mortgage can usually save you a few hundred a month and is amortized over 50 years.

There are a few types of 50 year mortgages, with the more common one being a 5/1 ARM hybrid. This meaning the interest rate is fixed for 5 years and then resets annually each year after. As an example, lets take a 30 year fixed loan at $300,000 at a rate of 6.5%. Principal and interest will cost you about $1,897. A 50-year home loan will only be $1,691 a month with principal and interest.

On the other hand, an interest only 30 year fixed would initially cost you $1,625 for the first 10 years and then the payment would reset to a few hundred more. However, the main difference is the interest only plan does not pay any principal which means during the first 10 years where payments are interest only, you will not build any equity in the home unless housing values increase in your area.