Comments on: 50 Year Mortgages – A Compound Interest Nightmare http://www.americanconsumernews.com/2007/04/50-year-mortgages-a-compound-interest-nightmare.html Helping Smart Shoppers Save Fri, 19 Mar 2010 23:19:07 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Minimum Wage http://www.americanconsumernews.com/2007/04/50-year-mortgages-a-compound-interest-nightmare.html/comment-page-1#comment-627 Minimum Wage Wed, 25 Apr 2007 05:22:00 +0000 http://www.americanconsumernews.com/2007/04/50-year-mortgages-a-compound-interest-nightmare.html#comment-627 I have no hope of buying a house.<br/><br/>Therefore, if I had the opportunity to take a 50-year mortgage with NO pre-payment penalty, wouldn't that be a better deal than perpetually renting?<br/><br/>My thinking is that with the mortgage, even though it would never get paid off until sale, I would be able to lock in my P&I payment, which I consider a vast improvement over not being able to lock in anything and helplessly watching rents go up and up.<br/><br/>Sure, it would be all interest, but at least I would lock in the payment and might even get a teeny tax break, PLUS I'd capture any appreciation in the home's value, which runs circles around renting all day long. I have no hope of buying a house.

Therefore, if I had the opportunity to take a 50-year mortgage with NO pre-payment penalty, wouldn’t that be a better deal than perpetually renting?

My thinking is that with the mortgage, even though it would never get paid off until sale, I would be able to lock in my P&I payment, which I consider a vast improvement over not being able to lock in anything and helplessly watching rents go up and up.

Sure, it would be all interest, but at least I would lock in the payment and might even get a teeny tax break, PLUS I’d capture any appreciation in the home’s value, which runs circles around renting all day long.

]]> By: Anonymous http://www.americanconsumernews.com/2007/04/50-year-mortgages-a-compound-interest-nightmare.html/comment-page-1#comment-620 Anonymous Mon, 23 Apr 2007 20:15:00 +0000 http://www.americanconsumernews.com/2007/04/50-year-mortgages-a-compound-interest-nightmare.html#comment-620 Or, assuming there is no pre-payment penalty, you could look at it another way: it simply gives you greater flexibility in how much you pay every month. If you can use an amortization calculator, it doesn't have to result in your paying interest for 50 years.<br/><br/>Some people don't want to be "out of debt" just for its own sake...for example, by investing a larger percentage of your income into your house, you not only lose opportunities to invest elsewhere for higher returns but also potentially put yourself into a dangerously undiversified situation where too large a percentage of your wealth is tied up in home equity. Or, assuming there is no pre-payment penalty, you could look at it another way: it simply gives you greater flexibility in how much you pay every month. If you can use an amortization calculator, it doesn’t have to result in your paying interest for 50 years.

Some people don’t want to be “out of debt” just for its own sake…for example, by investing a larger percentage of your income into your house, you not only lose opportunities to invest elsewhere for higher returns but also potentially put yourself into a dangerously undiversified situation where too large a percentage of your wealth is tied up in home equity.

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