Question

In: Accounting

Is it reasonable to allow home mortgages of, say 50 or 60 years? Think of this...

Is it reasonable to allow home mortgages of, say 50 or 60 years? Think of this from the standpoint of the total amount paid after the loan has been completely paid off, from the view of the business, from the view of the customer.

Solutions

Expert Solution

  • According  to Freddie Mac Today borrowers can take a loan for the term of 30-year mortgage for 10% and a 15-year loan for 9.2%, compared to 10% and 9.2%, respectively, just a year ago.
  • Before talking about the pros and cons of taking loan against mortgage of house for a period of 50-60 years, should consider the facts:-

you can avail shorten the term of your loan by opting for a period of 30 year loan instead, becoming mortgage-free house.

To avails long term loan  from a 30-year to a 50-60 years you might be cutting burden of total interest costs by half.

After availing loan for the term of 50-60 years, you became the ultimate owner of the said mortgage property only after paid off off all the interest liability. It take a long period from the beginning.

In view of customer-

It get relief to the customers in term of interest burdens.  But customers became the ultimate owner of the said property only after 50-60 years.

In view of business-

It not a good deal in the sight of business. It took very long time to recovery of capital


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