You should really take the time to think about taking out a 40-year loan to purchase your house.

For many years, as home prices spiraled upwards, many people began being priced out of the real estate market. The American Dream of home ownership was just that for many ….. just a dream.

But the extra 10 or 20 years won’t reduce your monthly payments all that much. Plus you’ll pay so much more in interest to your lender. As a result, your equity will grow very slowly and your home will never achieve being a good investment, or helping you to save and build wealth.

Take this example - look at how much more it will cost to borrow $100,000 and repay it back over 40 or 50 years, compared to the traditional 15 or 30 years in a standard mortgage loan.

There is a basic fact about the mortgage business.  The longer the term of the loan, the higher the interest rate. Why you ask? Because 40 or 50 year loans are riskier since lenders need to wait a longer period of time to be repaid.

With good credit and a suitable down payment, you could probably get a $100,000 mortgage for 15 years at 5.7%. That same loan over 30 years would probably cost you 6%. For 40 years, it would be 6.25%.

Below is a table that demonstrates what your monthly payment would be for both interest and principal — taxes, insurance or any fees or assessments are extra — and the total amount you would pay in interest over the life of the loan:

- $828 a month for a 15-year loan and $48,992 in interest.
- $600 a month for a 30-year loan and $115,838 in interest.
- $568 a month for a 40-year loan and $172,515 in interest.

Quite a suprise isn’t it?  Don’t be fooled.  Proceed with care if you are considering a 40 year or longer loan.