EvilCat Breath
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- Sep 23, 2016
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When you rent taxes and insurance are passed on along with the increase.
Trump proposes 50-year mortgage to help affordability
- Thread starter Dont Taz Me Bro
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Winston
Platinum Member
Did you see Trinity county? $280,000. Hell, Lassen is even cheaper, $236,000--but only prison guards live there, LOL. But Trinity, they are certainly on my radar. But when you got four counties in the Bay Area stroking close to two million, it distorts the numbers. And I don't get it, what is the draw? My sons have friends living in this area. Yeah, they are all renting. Nice places, don't get me wrong, but making crazy money. Engineers from Google and Facebook, or whatever they are called now. Money managers for some of the biggest names in Hollywood. Couples, I can name more than a few, knocking down half a million a year in income in California, and RENTING! Blows my mind. What is there?In California where the median home is over $800,000 a 50 year mortgage is the difference between a home and a rent increase every year.
No, this 50 year mortgage is little more than clown theater. But I think I understand Trump a little better now, and in some ways, that is kind of a good thing. Trump is all about TODAY. And there really is a place for that. Going to business school, the right way, after about a decade "in the field". Finance class, graduate level, professor asks what the corporate goal should be. Oh, I jump on it, get recognized, "Maximize contribution". "Wrong", he goes, and I look at him like he just grew another head.
Little punk ass frat boy in the back gets recognized, "Maximize stock price". "Exactly" the professor goes. Damn, I about go in to toxic shock. I mean I am freaking the **** out. Professors comes back to me and asks if I have a problem. In my slow, pronounced, Appalachian drawl I said, "You mean to tell me how much other people think I am going to make tomorrow is more important than how much money I made today?". He was like, "exactly". My response, "well I just pissed away thirty grand", the whole class erupted in laughter.
But, there is a little background that I haven't revealed. Suffice it to say, that professor came to know me well. Like Trump, I was about today. You can't eat tomorrow. And you can live that way, for a while, but it can't go into perpetuity. Eventually, you got to pay the piper. That is where Trump finds himself now. I kind of feel bad for the old fool. He never had a chance.
As long as there is no prepayment penalty, what's the problem? This could be a good thing for home ownership.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
You don't have to go 50 years if you pay extra toward the principal every month or at least whenever you can afford to do so.
Winston
Platinum Member
Not so much now, but for twenty years I kind of carved a niche into asset management. When you became land rich, and income poor, you called me. I mean look, you own a couple hundred acres in the Blue Ridge mountains, you want to keep it in the family, or at the very least. leave a stewardship to that land that you so willing accepted. Yep, you called me.
And I agree with you. I mean I have seen it play out. I don't care who you are or what you do. The single most important factor determining your financial position at retirement, when your home was paid off. Paid off when you are under 30? Dude was a furniture factory worker, and his wife. Upholstery for him, good money. But paid the house off under 30. Just kept buying more, repeat and recycle. Dude ate out at least once a day, most of the time twice. "Not leaving all my money to my kids, but I can't spend it fast enough". But a doctor, making a quarter million a year at 65, still carrying a mortgage for his home at the country club. Nope, you going to keep working hoss.
JohnDB
Diamond Member
- Jun 16, 2021
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When they started offering 30 year mortgages instead of 20 year people thought that was stupid too. and it pretty much is. Insufficient interest rate difference and usually too small a portion of principle to matter much. A home is an investment. Usually every penny you pay for a 20 year mortgage you will get back as profit when you sell your home IF, AND ONLY IF, you made a good purchase.
Same thing with car loans. Anything over a 2 year loan on a car is a waste. Meaning if you can't afford the payments on a 2 year note for your vehicle you can't afford the vehicle. Buy something cheaper. It's not an investment in a portable recreation center....it's a freaking means of transportation. Something to get to and from work, grocery store, or vacation.
Rule of thumb is that you pay cash for things that depreciate in value (like food, cars and trucks) but borrow money for things that appreciate in value.
Being upside down on car loans and houses is ONE of MANY ways people get into financial distress.
A 50 year mortgage is generally a bad idea. So is a 5 year interest only balloon mortgage.
However rates ought to be going down soon.
New homes are selling much cheaper than established homes. The white goods are a part of the issue, also established homes Usually have all construction issues addressed and are closer to civilization.
New homes in New subdivisions have so many issues anymore that nobody wants them. King studs that don't reach both floors or beams in a single continuous manner are almost normal instead of the massive construction violation they really are. Plugs and light switches being crooked are all ignored. Base boards with gaps....plumbing issues abound like a lack of stack on drains. Nevermind the leaks. Rafters too far apart is not even considered anymore....the sags in roofline are considered normal after a few years....
50 year Mortgage on a home that won't last ten years is hardly a surprise....unwise but not unexpected.
Same thing with car loans. Anything over a 2 year loan on a car is a waste. Meaning if you can't afford the payments on a 2 year note for your vehicle you can't afford the vehicle. Buy something cheaper. It's not an investment in a portable recreation center....it's a freaking means of transportation. Something to get to and from work, grocery store, or vacation.
Rule of thumb is that you pay cash for things that depreciate in value (like food, cars and trucks) but borrow money for things that appreciate in value.
Being upside down on car loans and houses is ONE of MANY ways people get into financial distress.
A 50 year mortgage is generally a bad idea. So is a 5 year interest only balloon mortgage.
However rates ought to be going down soon.
New homes are selling much cheaper than established homes. The white goods are a part of the issue, also established homes Usually have all construction issues addressed and are closer to civilization.
New homes in New subdivisions have so many issues anymore that nobody wants them. King studs that don't reach both floors or beams in a single continuous manner are almost normal instead of the massive construction violation they really are. Plugs and light switches being crooked are all ignored. Base boards with gaps....plumbing issues abound like a lack of stack on drains. Nevermind the leaks. Rafters too far apart is not even considered anymore....the sags in roofline are considered normal after a few years....
50 year Mortgage on a home that won't last ten years is hardly a surprise....unwise but not unexpected.
Winston
Platinum Member
Actually, you are right. Just double the principal pay down each month. Excel will give it to you. If you are paying twenty bucks to the principal. pop it to forty bucks. Essentially you have a 25 year mortgage, with a few months bonus if you never miss. But you also have flexibility. My concern with a 50 year mortgage is the rate the banks would be willing to accept. That is a huge determinate of the value of the loan.
Make Indentured Servants Great Again.
Live with the parental units.
leftwinger
Diamond Member
Or as most do, they sell out in 7-20 years and upgrade. As the housing market always goes up over time. You just have to "get in" the door and have a steady income.
Taxes don't "rise" as mentioned above by SR. STAIN. Not in CA. thanks to prop 13 from the 70s'. Not until you resell it. Taxes can go up on the new sale value.
50 year is cheaper per month. You can get started.//
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Concerned American
Diamond Member
Jarvis Gann was the absolute best thing ever enacted in CA.
Missourian
Diamond Member
If the alternative is paying rent for the rest of your life...at least you're getting some equity for your money.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.
leftwinger
Diamond Member
Stain would love it if HarryArse or Obiden 1.0 suggested it//
Missourian
Diamond Member
The house my folks bought for $27k sold for $350k after 25 years.
Now the house they bought in 2004 for 100k is worth 600k in 2024.
Even if they paid quadruple the original price in interest over 20 years, they would have made over 500,000 thousand dollars.
I bought my house 13 years ago and it's gone from 44k to 180k in that time.
Past growth in housing equity isn't a guarantee of future growth... but rent is paying someone else's mortgage, so any bet on future growth in equity is a good one.
Muhammed
Diamond Member
It's still a far better option than renting.
WorldWatcher
Platinum Member
With any mortgage there is equity after the fist payment, not much mind you, but part of each payment goes to P&I.
Equity is a function of two things, value and loan balance. So if the market increases that also adds to equity.
WW
WorldWatcher
Platinum Member
I'm * * * NOT * * * saying that taking on a 50 year mortgage is good.
But I will present some other considerations.
#1 What it does do (50-year fixed rate) is lock in a persons mortage cost. With a fixed rate mortgage your P&I does not increase over the life of the loan. So in the long term more interest will be paid, but in the short term the cost of the loan in locked. That can be a huge advantage to some especially if the mortgage P&I is less then the cost of renting equivilant space. As each year passes, rent increases, but the mortgage P&I remains flat. With a mortgage of $2,000 (P*I) today, it's still $2,000 in ten years, and $2,000 in 25 years. For most people income increases as they get older and gain more skills and experience. That means the mortgage P&I becomes a SMALLER percentage of overall income.
#2 The borrower doesn't have to keep the 50-years mortgage or pay it back in 50-years. As income increases (see above) if the borrower has ensured their is no early payment penality (and I've not seen one from a reputable mortgage provider), then they can increase the amount of the monthly payments decreasing the "50-year" loan to 30, 25, 20? What the lower initial mortgage for P&I does is provide flexibility.
#3 Then there is the hold & sell or hold & refinance option. Once the fixed mortgage P&I is established, then over time the borrower can refinance to something with a slightly lower rate and shorter time. That would probably result in an increase in the monthly P&I, but if the borrowers income has increased they may be able to handle it.
WW
But I will present some other considerations.
#1 What it does do (50-year fixed rate) is lock in a persons mortage cost. With a fixed rate mortgage your P&I does not increase over the life of the loan. So in the long term more interest will be paid, but in the short term the cost of the loan in locked. That can be a huge advantage to some especially if the mortgage P&I is less then the cost of renting equivilant space. As each year passes, rent increases, but the mortgage P&I remains flat. With a mortgage of $2,000 (P*I) today, it's still $2,000 in ten years, and $2,000 in 25 years. For most people income increases as they get older and gain more skills and experience. That means the mortgage P&I becomes a SMALLER percentage of overall income.
#2 The borrower doesn't have to keep the 50-years mortgage or pay it back in 50-years. As income increases (see above) if the borrower has ensured their is no early payment penality (and I've not seen one from a reputable mortgage provider), then they can increase the amount of the monthly payments decreasing the "50-year" loan to 30, 25, 20? What the lower initial mortgage for P&I does is provide flexibility.
#3 Then there is the hold & sell or hold & refinance option. Once the fixed mortgage P&I is established, then over time the borrower can refinance to something with a slightly lower rate and shorter time. That would probably result in an increase in the monthly P&I, but if the borrowers income has increased they may be able to handle it.
WW
Zincwarrior
Diamond Member
Forever debt. We are becoming India.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.
iamwhatiseem
Diamond Member
The idea of 50 year mortgages is not new. Other politicians and lenders have been bringing it up for several years.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.
It is a catastrophically bad idea, but then again - so is the 30 year mortgage. It takes that mistake and expands it into full retard.
In every sense it is basically renting the home, but you have to pay for all repairs etc. yourself.
Only an idiot would think this is a good idea.
SweetTea
Diamond Member
- May 10, 2015
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Forever rent...what is the difference other than rent continues to increase every year and no equity is gained. A 50 year mortgage would lock in a payment that would likely be much lower than prevailing rents 30-50years into the future. As income rises, a smart person would pay down the mortgage and could afford to.
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