Here are just a few benefits of a 40 year amortization.
Lower Monthly Mortgage Payments
Easier To Qualify For The Loan
Qualify For A Bigger and Better Home
Lower Monthly Mortgage Payments
The additional 10 years of amortization lowers your monthly mortgage significantly. Take for example a $500,000 loan at 5.5%%. The monthly mortgage payment with a 30-Year Amortization is $2,838. The monthly mortgage payment with a 40-Year Amortization (at 5.5%) is only $2,578. That is a monthly savings of $260 and an annual savings of $3,120.
Easier To Qualify For The Loan
A 40-Year Amortization means your monthly payment is lower than a traditional loan with a 30-Year Amortization. A lower monthly payment means you have a better overall debt ratio (your debts relative to your income) and will have an easier time qualifying for a loan. Typically lenders look for a debt ratio of 35-40%.
Qualify For A Bigger and Better Home
A 40-Year Amortization has made homes more affordable for buyers. With a 40-Year Amortization a home will cost you less per month. Since lenders look at your debt ratio to qualify you for the maximum loan amount, a 40 Year Amortization will mean you will qualify for a more expensive home.
MORE MORTGAGE & LOAN ARTICLES...
- WHAT IS THE TYPICAL PREPAYMENT PENALTY AMOUNT?
- WHAT ARE THE BENEFITS OF A DEBT CONSOLIDATION LOAN?
- WHAT ARE ALTERNATIVE INCOME DOCUMENT LOANS?
- HOW TO REDUCE YOUR MONTHLY MORTGAGE LOAN PAYMENTS
- ARM INDEXES
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