50-Year Mortgages on Your Home

CNNMoney.com reports that as home prices and interest rates go up, the banks are working hard to figure out how to keep those monthly payments down. What they have come up with is the 50-year adjustable rate mortgage.

The problem with a longer term is, of course, that you are paying a smaller portion of the principal each month and over the life of the loan you will pay more interest.

Flexo at Consumerism Commentary did a quick comparison and found that using as an example a 30-year $500,000 mortgage at a 7% interest rate your monthly payment would be $3,326.51. If you spread that same loan over 50 years, your payment only drops about $330 dollars, to $3,008.44.

But now for the scary part of his calculation: Over the life of the 30-year mortgage, you would pay a whopping $697,544.49 in interest. Spread that over 50 years and you will pay $1,305,065.35 in interest!

If that is not bad enough, all these are adjustable rate mortgages (ARMs) so at some point, if interest rates go up, you may be paying more a month than you would have if you took a 30 year conventional mortgage.