There is ABSOLUTELY NOTHING wrong with a 40-year mortgage!
There's so much hype and nonsense that goes around when it comes to mortgage discussions. "If you pay an extra $10 a week, you'll save $800,000 in interest payments!" Blah, blah, blah.
The bottom line regarding mortgage loans (or ANY loans) is this: THERE IS NO FREE LUNCH. If you borrow $300,000 for 1 month, you pay for one month's use of that money. If you borrow $300,000 for 10 years, you pay for 10 years' use of that money. People act like paying more every month on one's mortgage is going to somehow enable them to get some sort of "free ride" from the mortgage lender. The fact is that in order to save money on Interest Costs, you must take money out of your bank account and put it back in the pocket of your lender. You're saving money on Interest because you're not USING the money anymore!
That being said, I'm all for paying off one's mortgage early (if it makes financial sense). The only scenario in which it would not make sense to pay off a loan early is if you have an interest rate that is lower than the rate of return you could get on a mutual fund or other investment. For example, if you have an extra $5000 laying around, you could either pay off $5000 worth of Principal on your mortgage at 5% (for example) or you could buy shares in a mutual fund (or other investment) that is likely to yield 9% annually. By using that money to pay down a 5% debt rather than earn a 9% yield, you are actually losing 4% of return you could be receiving. Even so, many people (like me) hate the idea of having an outstanding debt even when it may not make sense financially to pay it off. Again, I'm all for paying off mortgages early (I just paid off my mortgage about 25 years early).
I'm a bit confused about your plan to change the terms of the loan every few years (which would require a refinance each time which means more money in mortgage fees). Bearing in mind what I said about there being "no free lunch" (i.e., you don't pay interest on what you pay back), you may want to keep the low mortgage payment (amortized at 40 years) and then send "additional principal" payments as often as you like (once a month, once a week, once a day). As you make more money, you can put more toward additional principal payments and reduce the mortgage balance as fast or as slow as you would like. (By the way, make sure you write "Additional Principal" on the check so the mortgage company will know how to apply the money.) After you pay down the principal balance significantly and your income goes up significantly, you can eventually make a big lump payment and retire the entire balance (well before 40 years).
I think your plan is sound and makes sense. The only caution I would offer is to remember that your mortgage payment could change due to increases in property taxes and hazard insurance (T&I). If an extra couple hundred dollars per month puts the squeeze on your finances, then you may not have a lot of room to absorb any increases in your escrow payment. The escrow payment will probably not change much (if at all) during the first year, but you should be prepared to absorb some change just in case. Also, make sure to CONFIRM that any loan product you get DOES NOT have a "prepayment penalty." Even though it probably won't, it's best to make sure -- especially since you're wanting to pay the balance down aggressively.
20 years as a Consultant and Project Manager for the Mortgage Banking Industry.