California and the New 50-Year Mortgages

By AJ Fanter
Local Lender Columnist
Aug 2, 2006
Let's face it, home prices in California are some of the highest in the country and that means buyers, as well as lenders, must get creative when it comes to mortgages which is one of the reasons for the growing popularity of the new 40-year mortgages.

However, these days there's a new kid on the block: the 50-year mortgage. And if you're looking to purchase your first California home, this new longer-term mortgage could be the right solution for you.

Why A 50-Year Mortgage Work?

Owing to the high cost of homes in California as well as rising interest rates (and growing competition between mortgage lenders), lenders have needed to get creative in order to help would be homeowners obtain financing. By offering loans with longer terms (40 and 50 years versus the more traditional 30) and lower interest rates, they are able to do exactly that.

Benefits & Considerations of a 50-Year Mortgage

While being able to buy your piece of the California dream is probably the biggest benefit of a 50-year mortgage, there are a few things you will want to keep in mind. First, the new 50-year mortgages only have a fixed interest rate for the first 5-years. After that the interest rate becomes adjustable. Second, you will not build up equity as quickly as you would with a shorter term loan. However, if you are looking to live in your California home for roughly 5 years, this is one mortgage worth investigating in - particularly if you thought you had "priced" out of the California housing market.

Sources:
50-Year Mortgage Hits Market

About the Author
AJ Fanter is a freelance writer based in Reno, NV.