Trump proposes 50-year mortgage to help affordability

[Dont Taz Me Bro]

This is an incredibly dumb idea. Who on Earth would want a 50-year mortgage? You're indebting yourself your entire life and will pay far more interest over the course of the loan than your home will ever be worth. It's a lifetime of indebtedness. Japan attempted a similar approach in the 1980s and it didn't work.

Trump proposes 50-year mortgage to help affordability

Trump supports 50-year mortgages to lower monthly payments, but longer terms reduce equity and aren't supported under current mortgage rules.

www.housingwire.com

 

[excalibur]

Bad idea.

 

[shockedcanadian]

This is an incredibly dumb idea. Who on Earth would want a 50-year mortgage? You're indebting yourself your entire life and will pay far more interest over the course of the loan than your home will ever be worth. It's a lifetime of indebtedness. Japan attempted a similar approach in the 1980s and it didn't work.

Trump proposes 50-year mortgage to help affordability

Trump supports 50-year mortgages to lower monthly payments, but longer terms reduce equity and aren't supported under current mortgage rules.

www.housingwire.com

WHy is it a bad idea? It provide mortgage certainly. If you dont like terms you can sell you move to another company who will probably offer to pay any fee for breaking the mortgage.

I think this is a good idea with little risk to buyers.

 

[odanny]

What are new car loans now, 8 years? Are they going a full decade yet? They are going to have to soon.

 

[ozro]

It seems like this would be like paying rent and having a 50 year lease. Maybe the terms of the mortgage would give some equity after 20 or thirty years.
I don't see it working for anyone except lenders.

 

[shockedcanadian]

It seems like this would be like paying rent and having a 50 year lease. Maybe the terms of the mortgage would give some equity after 20 or thirty years.
I don't see it working for anyone except lenders.

You will pay far more over the duration, so the government should allow any payments at any time. You can make lump payments along the way, or just save what you can to one day pay it one in a lump sum.

 

[pknopp]

Ranks right up there with his argument for negative interest rates.

 

[MarathonMike]

Would it reduce the monthly payment enough to make currently unaffordable homes affordable ? Hmmm I don't know.

 

[ozro]

You will pay far more over the duration, so the government should allow any payments at any time. You can make lump payments along the way, or just save what you can to one day pay it one in a lump sum.

if the borrower is that disciplined, they will probably be smart enough to go for a shorter term loan in the first place.

 

[shockedcanadian]

if the borrower is that disciplined, they will probably be smart enough to go for a shorter term loan in the first place.

Well it depends on the rate offered.

If you can use the money saved to invest in the market and get an 8% return compounded while paying 4.5% or something on your mortgage, than that's the better play.

I was quite aggressive at one time and I wish I would have kept that level of aggression because I only lost money in one stock I invested in over three years and it was because of the "recommendation" by someone.

After that I decided to learn all I could and never take a tip at face value.

 

[MarcATL]

The interest rates should be low in order to not be abusive.

If that's the case, then go for it.

Homes are just too expensive, and prices never go down, not really.

We're living longer now anyway, and if this becomes a thing it could change the culture to encourage young people to buy a home right out of high school or college at the latest.

I like this kind of out-of-the-box thinking.

 

[Concerned American]

WHy is it a bad idea? It provide mortgage certainly. If you dont like terms you can sell you move to another company who will probably offer to pay any fee for breaking the mortgage.

I think this is a good idea with little risk to buyers.

Let me preface this with my statement that I do not like debt. That being said, there is a time and place. With the proper interest controls, this could be workable and to your point about moving or refinancing, that is valid. In the US, most mortgages do not have pre-payment penalties, so the borrower could pay off early or sell and move to another home with a sizable down payment -- virtually nothing has changed. When I purchased my first car, 3 year loans were the norm. Now with the exorbitant cost of autos, seven year loans are not unusual. It is the cost of borrowing. The alternative is to save and buy at the inflated price down the road when you have saved enough.

 

[shockedcanadian]

Let me preface this with my statement that I do not like debt. That being said, there is a time and place. With the proper interest controls, this could be workable and to your point about moving or refinancing, that is valid. In the US, most mortgages do not have pre-payment penalties, so the borrower could pay off early or sell and move to another home with a sizable down payment -- virtually nothing has changed. When I purchased my first car, 3 year loans were the norm. Now with the exorbitant cost of autos, seven year loans are not unusual. It is the cost of borrowing. The alternative is to save and buy at the inflated price down the road when you have saved enough.

Debt is your friend as long as you put it to work for you.

Being highly leveraged is risky but it's the easiest way to increase your net worth as long as you do your due diligence.

 

[Winston]

Would it reduce the monthly payment enough to make currently unaffordable homes affordable ? Hmmm I don't know.

$400,000 home, 20% down, assuming the same interest rate, same property tax rate, and no PMI.

30 year, 5.98%, $2,289.45 month. 50 year, $2,054.77. Save a little over 200 a month and pay an extra fifty grand over the life of the mortgage. Idiotic at best.

 

[Concerned American]

It seems like this would be like paying rent and having a 50 year lease. Maybe the terms of the mortgage would give some equity after 20 or thirty years.
I don't see it working for anyone except lenders.

No question, the lender is always the one in the cat bird seat. My advice is use credit sparingly with the sole intention of becoming debt free at the earliest possible moment. It can be done if credit is used properly.

 

[Concerned American]

It seems like this would be like paying rent and having a 50 year lease.

Except that leases build no equity

 

[MarathonMike]

$400,000 home, 20% down, assuming the same interest rate, same property tax rate, and no PMI.

30 year, 5.98%, $2,289.45 month. 50 year, $2,054.77. Save a little over 200 a month and pay an extra fifty grand over the life of the mortgage. Idiotic at best.

I don't agree with all of Trump's ideas and this one didn't seem like a winner.

 

[Concerned American]

Debt is your friend as long as you put it to work for you.

Being highly leveraged is risky but it's the easiest way to increase your net worth as long as you do your due diligence.

I used debt as a young person. Improperly at first, but I learned in short order that paying interest is like flushing money down the crapper. Being debt free and liquid is the most liberating position to be in IMHO.

 

[WorldWatcher]

Just say'n...

He probably got the idea after traveling to Japan.

WW

 

[Blaster]

This is an incredibly dumb idea. Who on Earth would want a 50-year mortgage? You're indebting yourself your entire life and will pay far more interest over the course of the loan than your home will ever be worth. It's a lifetime of indebtedness. Japan attempted a similar approach in the 1980s and it didn't work.

Trump proposes 50-year mortgage to help affordability

Trump supports 50-year mortgages to lower monthly payments, but longer terms reduce equity and aren't supported under current mortgage rules.

www.housingwire.com

Then don't get a 50 year mortgage. Problem solved.