No. of Recommendations: 4
Hi ShamboRo,

I personally would stay away from a 40-yr mortgage as it will be years and years and years before you build equity.

Building equity (not considering appreciation) is simply a factor of how fast you pay off the loan. In this aspect it doesn't matter whether you're in a 40 year or 5 year loan... except in a shorter term loan you are FORCED to pay back the money faster.

In a 40 year loan you simply have more freedom of choice regarding where you employ your capital. You can use it in to reduce your interest, OR you can use it to grow your retirement accounts.

Of course.... you could ALSO use it on fast cars & champagne!

Building equity is a function of appreciation & paying the loan back. Generally you don't have control over appreciation... but you CAN have control over how much you pay back IF you take longer term loans.

BTW... 40 year fixed loans (extended from 30 year loans) are generally 1/4% add to rate, when they are offered.

Mortgage Fool
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