Mortgages that outlive you. The truest kind of mortgage, since a root of the word is mort — French for death.
They're all but guaranteed to build very little equity during the first years and put people at almost as great a risk as those with interest-only loans of going upside-down on their mortgage should the market take a big turn south.
Liz Pulliam Weston suggests the following in light of this new half-century behemoth:
- Consider your goals. You may realize that you'll need investment vehicles besides your house's appreciation and equity for building wealth.
- Match the mortgage to your time horizon. Meaning that you make sure you have a fixed rate for at least as long as you're in the house. (Granted, a 50-year fixed will do this for just about everybody, but that's not the point. 50-year mortgages are bad. Very, very bad.)
- Settle for less house. If you need a 50-year or an interest-only loan to be able to qualify, set your sights lower and at least get a 30-year fixed.
To this, I might add settle for no house. Rent! If you're not building any equity anyway, why take on the burden of home ownership?
To see the difference in interest and equity between the different types of loans, you can check out the MSN article by the link at the upper left, or play with JLP's Mortgage Calculator.
Great article! Mortgage. Find best mortgage rate and mortgage calculator.
It never fails to amaze me what the bank pimps will do to market their product. A forty or fifty year mortgage is just an old prostitute loan dressed up as a young come hither fresh faced mortgage youngster. Why do people take this bait and spend the rest of their lives in slavery? Perhaps they just like flushing money down the toilet?
It is far simpler to merely rent for five years, build up a 25% downpayment (take extra jobs if you have to in order to do this), buy something less than the Taj Mahal of your imagaination and then, once you are in your house, pay the pimp bank off as fast as you can.
Everyone seems to think that building equity in your own home and eventually owning your home free and clear is a stupid financial route to take. i don't believe this is the case. For the average family with 1 or more adults working outside the home, paying off the mortgage eliminates their largest expense. Once this bill is gone, you can save all that lovely lolly and put it into whatever investment vehicle you want to: you can be your own banker. And your route to financial Nirvana will not be impeded by stupid interest fees.
In addition, while this route is rather a boring, placid, plodding sort of path that perhsps like the blood letting of the stock market, it is just an ideal financial path for harassed mothers and busy fathers. You can concentrate on family life, enjoying the summer holidays, gardening, reading, writing and actually living. You know, it is actually still possible to take this route and have a comfortable financial life. We all do not need to have more and more money. We just need to have enough.
"Mort" means DEATH in french and what does the "gage" mean?
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larisa@larisajoyreilly.com
it only matters if you never pay off your mortgage if you have on property. Anyway why are people so stressed about paying it off when 1 in 3 people get divorced. Apart from this other circumstances like moving can impact on the repayment of the loan.
hey, well whatever the matter we can be sure it will work out in the end.