Trump to propose 50-year mortgages - bringing affordability to home buyers

This is renting with extra steps.

50 year mortgages are already a thing, they just do not make much sense.

 

Let's just pick an arbitrary age at which you have the down payment and job security to think about buying a house and put it at 28.

For a fifty year mortgage, you're paying on that note until you are 78. Even if you start at 22, you will still be paying that mortgage when you are on Social Security.

The average life expectancy in the US is 78.4 years. Less for males.

They want you working and paying interest for your entire adult life.

There are many solutions to the housing crisis that we can try. Making 50-year mortgages a common thing should not even be in the discussion.

 

It will absolutely lower monthly payments but let's play around with an amortization calculator.

$650,000 home financed at 15 years, 30 years, and 50 years at 6.125%
$5,529.06 monthly payment, $345,231.23 in interest
$3,949.47 monthly payment, $771,808.66 in interest
$3,481.83 monthly payment, $1,439,097.44 in interest

But Banks will almost certainly have to offer higher rates at 50 years than 30 or 15 years. You could argue that you could invest the difference in mortgage payments over the life time of the loan at a 9% market return (not guaranteed), and you would end up much richer in the end. But your average consumer will end up buying a house they could not afford with a mortgage they cannot afford and not have extra money left over.
Similar to 72 month automobile loans.

 

More evidence of Trump's mental decline. Where's Jake Tapper to report on this?

 

The first 7 years on a 30 year mortgage you practically have no equity and are only paying interest lol. Why the **** would you think a 50 year mortgage would be a good idea when the homeowner would have no equity for the first decade especially when we have an awful job market.

Dumb and dumber

We've learned absolutely nothing from the sub prime crisis

 

Buy it when you are 25, pay it off when you are 75.

 

I can't see this impacting affordability very much considering the massive amount of interest the buyer will have to pay.

Given $500k house with $400k loan, fixed interest rate
15 year mortgage at 5.5% interest is $3,268/month.
30 year mortgage at 6.0% interest is $2,398/month
50 year mortgage at 6.5% interest is $2,254/month.

The 50 year mortgage pays $489k more in interest over the lifetime of the loan for $140 less in monthly payment.

I don't mind it being an option for those who knows what they're getting into, but I think it's a terrible idea for retirees to continue to have a mortgage. Normalizing 50 year mortgage would even worse than normalizing 8 year car notes.

At least modern cars in general last much longer than cars built 30 years ago. Can't say the same about houses.

EDIT: had to fix the numbers. The calculator I used had assumed some insurance and PMI.

 

Just... Build... More... Housing...

 

This just shows your absolute lack of understanding of how interest works. 50 year mortgage, are you kidding me? Lets get to the root of the problem and its not needing more long term debt. You are going to be paying 1.5 million for a 500k house. Jumping Jesus on a pogo stick this is dumb. This is just downright the most ham handed unintellectual proposal I have ever seen on the mortgage side of things. You really don't know how banking works; you think this is a good idea? SMH

Its better to be thought an idiot than to open your mouth ( or keyboard) and remove all doubt.

 

I would say, looking at the 30 year vs 50 year. If $450 dollars a month is going to break you then you shouldn't get the loan. Can you image someone looking at those two mortgages and thinking, "Man I could do some great things with that extra $450, I am going to pay for an extra 20 years to save $450 dollars a month. . . . . "

I don't think Trump knows how mortgages work, that could explain all the bankruptcies. What a moron.

 

Rice MBA and a job in middle-management will get you to believe a 50-year mortgage is a good thing, hell, it'll get you to believe damn near anything obviously

 

Hmm

Considering how much of the payment is interest in a 50 year loan, what if this concept of 'you will own nothing' is pushed to the next step and make 'interest only' mortgages the new standard of 'homeownership'?

It'll be like renting, but with some twists.

Benefit to the 'homeowner':
- lower monthly cost than loans
- you cannot be evicted or lease not renewed as long as you make payment
- essentially right of first refusal to buy the house, could benefit if the property value increases even without paying into the principle.
- monthly costs can be projected out for years

Benefit to lender/investor
- No administrative cost associated with being a landlord
- The house owner is responsible for taxes and maintenance
- Turnover should be much much less than renters.

There are probably lots of issues that I am not thinking of. Feels like these kind of mortgages would just be building a house of cards that can cause massive waves of foreclosure if the economy has a downturn since people will almost certainly be upside down if housing market crashes.

 

It's like the old slumlord "contract for deed"

 

More like a scam. I'm sure some people will bite, just like they did with interest-only mortgage loans.

The real problem with housing is supply. Red tape, zoning restrictions, over-regulation, etc. Republicans usually favor increasing supply and reducing friction, but on housing they seem to shy away. Maybe it has something to do with investors owning ~1/3 of residential property now, leaving far less for actual individuals. Whatever the case, we have a supply issue and these gimmicks are, at best, just poor band-aids.

 

‘I Don’t Wanna Hear About the Affordability’:
Trump Denies Americans Are Paying More for Food



ending the ill-conceived tariff will lead to a path towards

"affordability"​

 

Is "affordability" the new "groceries"?

 

Pulte? Where have I seen that name before. Oh well, I'm certain he has no conflicts of interest and is focused on doing what is best for all Americans.



On second thought, maybe Trump's Director of the Federal Housing Finance Agency/Chairman of Fannie Mae and Freddie Mac might have a wee conflict or two.

 

Buy it when you're 25 => lose your job to AI at 35 => you find out you have zero equity after making payments for 10 years and all you've paid was interest

We have the worst job market in decades right now and you want people to be tied to long term commitments. Disaster