A 40 year mortgage is a mortgage loan that is structured to be repaid over a 40 year period. The conventional mortgage repayment is 30 years. With a 40 year mortgage, the monthly payments are much lower.
While a 40 year mortgage is obviously more affordable to a borrower when one is paying much lower monthly payments, such a long-term loan typically come at high interest rates and will eventually cost you more over the loan lifetime.
Basically, this is how it works. If you borrow $100,000 with a 30-year term at 5 percent interest rate, monthly payments will be $536. On the other hand if you borrowed the same amount at the same rate with a 40-year term, your payments would total to only $482, saving you $54 per month.
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