40 Year Mortgage Rates

If you’re considering refinancing you might be tempted by the payment that comes with 40 year mortgage rates. Spreading your home loan payments out over 40 years instead of 30 will get you lower payments; however, is it worth paying the lender for an extra ten years of interest? Here are the pros and cons of 40 year mortgage rates to help you make an informed decision for your next home loan.

40 Year Mortgage Rates

Are there any advantages to choosing 40 year mortgage rates for your next home loan?

Many lenders are offering longer term lengths as an alternative to the traditional 30-year mortgage. Are these home loans a good idea or is choosing too long of a term length a mistake?

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40 Year Mortgage Rates Review

The majority of homeowners in the United States choose 30 year mortgage rates without giving a second thought. That includes adjustable rate mortgages like the popular 5/1 and 7/1 hybrid ARMs. You might be asking yourself “why would anyone drag out their home loan for 40 years?” By choosing 40 year mortgage rates for your next home loan your amortization schedule is based on 40 years instead of 30 resulting in lower payments.

Here’s an example to illustrate how lengthening the term gets you a lower payment amount:

Suppose you’re refinancing your home for $300,000. Based on your financial details you qualify for 30 year mortgage rates at 3.9 percent which gets you a payment of $1,410 per month. If you were to choose 40 year mortgage rates you’d qualify for 4.3 percent and a monthly payment of $1,300.

That’s a (perceived) savings of $110 per month. It’s worth noting that interest rates of this type are slightly higher than traditional 30 year refinance rates. Longer term lengths pose higher risk for lenders and therefor come with higher interest rates. Some borrowers might find they qualify for this type of home loan and not 30 year based on their debt-to-income ratio.

Disadvantages of 40 Year Mortgage Rates

Having a lower payment is all fine and dandy but what’s the down side of choosing this type of home loan? Your monthly payment might be lower ($110 per month in our example), the amount of interest you’re paying over the duration of your home loan is astronomical.

Another downside is that because your amortization schedule is spread out over 40 years instead of 30, you’re building equity in your home at a much slower rate. In an economy that’s seeing declining home values you could find yourself underwater. (Meaning you owe more than your home is worth which could make it very difficult to refinance later.)

Should you choose 40 year mortgage rates for your next home loan? I would recommend this type of loan only as a last resort if no other options are available for you. If you’re considering mortgage refinancing with 40 year mortgage rates you’ll never recoup your out-of-pocket expenses paid at closing making this type of home loan a losing proposition from day one.

You can learn more about avoiding common mortgage mistakes and getting the best deal on your next home loan by checking out my free Underground Mortgage Videos.

Current Mortgage Interest Rate Without Hidden Markup

Are you searching for the lowest current mortgage interest rate for your next home loan? Are you worried that hidden markup and junk fees could result in overpaying thousands of dollars every year? Did you know that according to the Secretary of Housing and Urban Development your friends and neighbors are overpaying sixteen billion dollars this year alone? Here are several of my best tips to help you find the lowest current mortgage interest rate without throwing money way on your mortgage broker’s BS or lender junk fees.

Current Mortgage Interest Rate Online

Mortgage quotes are easy to find online; every Tom, Dick, & Harry with a mortgage website will give you a “free” quote without obligation. (Before you call me a hypocrite, yes it’s true…so will my site; however, the difference is that I’m going to show you how see through all the hidden markup and junk fees your neighbors fell for…)

What is this hidden markup I’m going on about? That’s the point isn’t it? …It’s hidden. If it wasn’t hidden your neighbors wouldn’t be throwing away an average of $1200 a year thanks to lender paid compensation known as Yield Spread Premium. What is Yield Spread Premium? Simply put, your mortgage lender pays any broker that locks and closes your home loan with a higher than necessary current mortgage interest rate a kickback known to the mortgage fat cats as Yield Spread Premium.

Why You Need to Avoid Mortgage Yield Spread Premium

Here’s an example to illustrate the problem with this hidden markup of your current mortgage interest rate. Suppose for example you’re refinancing your home and the broker quotes you a current mortgage interest rate of 6.75% on a $315,000 home loan. The broker charges you a mortgage origination fee of 1.5 percent for their work arranging your home loan and brags about the deal they’re getting you.

What the broker isn’t telling you is that you could have had that lender’s lowest current mortgage interest rate of 6.0%; however, this person marked it up to collect a commission from the lender of 3.0% of your home loan amount. This is paid in addition to the point and a half you’re already overpaying the broker for their origination fee.

What the big deal about an extra .75 percent when mortgage refinancing? Your monthly payment on a 30 year, fixed rate home loan at 6.5% will be $2,043 per month. If you had the current mortgage interest rate you deserve at 6.0% your payment will only be $1,888 per month! That’s a difference of $155 per month, a whopping $1,860 per year! Don’t fall for the same trap your neighbors did when mortgage refinancing.

It is possible to pay a flat origination fee of 1.0% of your loan amount and refinance with a wholesale mortgage rate keeping that $1,860 in your pocket for the things that really matter. You don’t have to have a mortgage broker cousin or be a personal finance guru to get a current mortgage interest rate that doesn’t include this hidden markup…you just need to know how to go about it.

You can learn more about mortgage refinancing with wholesale rates without paying junk fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started on the path to taking back $1,860 per year on your next home loan…mortgage broker be dammed!