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Thursday, April 27, 2006

50 Year Mortgage

Statewide Bancorp of Rancho Cucamonga is now offering a 50 year mortgage. Over the past several years many lenders have been steering borrowers towards a 40 year mortgage rather than interest only loans, but this takes that one step further. Borrowers looking to reduce their monthly payment and buy a bigger house can now squeeze out an extra few hundred dollars a month.

From the article:
For a 30-year loan of $300,000 at 6.5 percent, principal and interest cost $1,896.20 per month. A 50-year loan for the same amount and at the same rate costs $1,691.15 per month in principal and interest. The 50-year loan costs $205 less per month, but the payments stretch out for 20 years longer and will cost a total of $332,058 more.

That extra cost is hard to ignore, but given California's inflated housing market it might be attractive to some people.

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