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Buying a Home with a 40 Year Mortgage
Buying a home with a 40 year monthly mortgage payment is a very risky move. You have to realize that you're going to have a mortgage payment for 40 years of your life that you can obviously barely afford right now.
I'm assuming you can't afford the standard 30 year mortgage because you're opting into the 40 year mortgage so you're having trouble getting approved for the mortgage you want. Why are you having trouble? Without telling the bank, can you really afford this home or do you just want it? Are you going to struggle for the next 40 years of your life or do you plan on getting a promotion soon? Or maybe even a second job to cover the extra money per month.
I suggest you add up the mortgage payment and taxes that the bank will approve you for because that's your monthly borrowing power. Your borrowing power is the amount of home you can afford but if you think about your monthly borrowing power it's the amount of a loan payment you can get. So if your mortgage and taxes add up to $1,000 then you can afford that much per month for any home including mortgage and taxes.
So start looking at a 15 year mortgage to see what you can actually AFFORD and be comfortable with over the next 15 years. Trust me in 10 years you will have paid off almost nothing on a 40 year mortgage loan but paid off 2/3 of your 15 year mortgage and be a very happy person. A mortgage calculator will tell you that a mortgage payment for $100,000 will be $790 over 15 years. Do you have any idea how much home that is in this terrible 2011 economy?
There are foreclosures left and right and you can get one for very cheap. There are also short sales where people owe more on there mortgage than the home is worth and the bank is approving that they can sell it because they can't afford the monthly mortgage payment. You can be the proud owner of a 2-3 bedroom home or condo with a 15 year mortgage rather than trying to sneak into a $200,000 home over 40 years which is just ridiculous and you know it.
The only thing you'll get out of a 40 year mortgage that barely pays any principal down is a little bragging to your friends and family about the home you now have. However, when they ask you to go to dinner together you have to say no because you can afford it "right now". Well that "right now" will be the next 40 years of your life.
The best thing about looking at mortgages you can afford over 15 years is that when you see a home come on the market for $120,000 you can still afford it over a 20 year mortgage which is much better than a 30 year or 40 year mortgage. If you're looking at your absolute maximum each day you know you can't afford the home that comes on the market for $5,000 more.
Knowledge and the use of a mortgage calculator will save you thousands of dollars. | 
