The Trump administration is considering a 50-year mortgage plan amid a housing affordability crisis, but critics warn that it could exacerbate household debt.
But won’t the rate be higher, like 30 year rates are higher than 15 year rates? I don’t know much about economics but I remember that being a thing when I was looking at mortgages. I assume it has to do with long-term risk for the lender.
Also, how many people actually stay in a home for 50 years without moving? I know my earlier house payments had a larger portion going to interest (I assume this is a math thing?) than my more recent payments, therefore you build equity really slowly at first, meaning you’re not building enough equity to even cover the costs of the ownership or the cost to sell unless you stay in place for a long time.
I’m just a dummy but this feels like a scary thing and not a good thing.
I’d think of it more as a way to lock in housing costs, rather than a way to buy a home. For example, I bought my condo 5 years ago. My apartment rent was say $2200/month including fees. My condo was $2000/month including fees, with a 15-year mortgage.
Five years later and my old apartment is listed for $3100/month. My condo is only $2200/month (fees went up).
I expect the spread to get worse over time.
Edit: not sure the cost would be lower enough monthly to justify the extra interest, but maybe there’s an edge case where it makes sense?
But won’t the rate be higher, like 30 year rates are higher than 15 year rates? I don’t know much about economics but I remember that being a thing when I was looking at mortgages. I assume it has to do with long-term risk for the lender.
Also, how many people actually stay in a home for 50 years without moving? I know my earlier house payments had a larger portion going to interest (I assume this is a math thing?) than my more recent payments, therefore you build equity really slowly at first, meaning you’re not building enough equity to even cover the costs of the ownership or the cost to sell unless you stay in place for a long time.
I’m just a dummy but this feels like a scary thing and not a good thing.
I’d think of it more as a way to lock in housing costs, rather than a way to buy a home. For example, I bought my condo 5 years ago. My apartment rent was say $2200/month including fees. My condo was $2000/month including fees, with a 15-year mortgage.
Five years later and my old apartment is listed for $3100/month. My condo is only $2200/month (fees went up).
I expect the spread to get worse over time.
Edit: not sure the cost would be lower enough monthly to justify the extra interest, but maybe there’s an edge case where it makes sense?