Fifty year mortgages? And how is that supposed to help?

I guess it would lower the monthly payment, similar to moving from a 15 year mortgage to 30 year. A 15 year monthly would be about $2,467 on a $300,000 loan, based on 5.6% interest. A 30 year at 6.48%, would be $1,892 per month.
 

It might make it possible for new home buyers to qualify for a loan, but at the same time, it may have the adverse effect of causing home prices overall to rise even more than they have already.

It will take years for owners to develop equity and resell that home, potentially entrapping them in it for a lifetime.

If home values fall over time, and they always have (sooner or later) homes will be worth less than the mortgage balance. This has happened even with 30 year mortgages - how much more so with 50 year mortgages.
 
IMO it’s just inflationary smoke and mirrors with little benefit.

It may be of some slight benefit to homebuyers that will trade up every few years or it may allow home sellers to squeeze out a slightly higher sale price.

For the average person, buying their forever home, I would encourage them to take a long term fixed rate mortgage and systematically make additional principal payments so it can be paid off in 10-15 years.
 
I think it will work with some of the 20 and 30 somethings. My 38 year old neighbor bought a $50,000 car a few years back on a long term loan. She makes less than $40,000 a year. All she cared about was the monthly payment. It’s about paid off and she wants to buy a new one when it is.

She wants a $350,000 house. With a 50 year loan, she could probably afford the monthly payments. That’s all that will matter to her.
 
I think the "experts" are overlooking a key factor. There are a lot of the younger generations that no longer feel the need for owning a home. Seems they prefer to rent. That and a lot of them know that soon, the Baby Boomer parents/grand parents will be passing on and they will be inheriting a home. As others have said, 50 year mortgage will help a banks bottom line... home owner... not so much.
 
@squatting dog …that is what I see too. In order for a mortgage to benefit the borrower there must be some equity being accrued. That equity needs to equal or exceed the costs incurred if the borrower needs to sell. In my area it costs 5-6% of the selling price to utilize a realtor. In a fifty year mortgage you would have to depend upon an escalating market. My market has been flat for about 3 years. In a flat market with a 300000 note at 6% it would take you 10 years to break even.
 
The banks are pretty much out of it after the loan is made.

Today the bulk of mortgage loans are bundled and sold on the secondary market in the form of mortgage backed securities similar to bonds.

By some estimates, more than half are handled by quasi governmental agencies like Freddie Mac and Fannie Mae.

The bulk of them most likely end up as part of the investments in our annuities, retirement funds, etc…
 
Lenders often sell mortgages to other companies to free up funds for them to offer more loans. That happened several times on my first home, but the home I'm in now was financed through Bank of America, who still holds the note.
 
It doesn't seem like that bad of an idea for renters who can't afford to buy a home, but keep having their rents raised at the end of each lease. If, instead of renting, they bought a house with a 50 year mortgage, they'd be in a stable situation. They'd know how much their payments would be from year to year. If they started to earn good money, they could refinance their homes.

Of course, 50 year mortgages will add more buyers to housing market, which will cause prices to increase even more.
 
Housing including rent price issues still comeback to supply and demand. And just little extra demand in a few markets with a 50 year mortgage might very well increase prices.

Over all it's a supply issue along with greed.Not just talking big corporations or countries buying up real estate/houses but local home owners and apartment owners also in the greed game as well. Cat's out of the bag but after HGTV came about very high expectations for sellers and buyers/renters.

The 50 year mortgage should be considered 'a' tool to buy a house. But not 'the' way or 'the' solution to housing costs.
 
StarSong said:
Last night I had a little time to noodle around the web, and looked up 50 year mortgages. Banks are NOT offering them - this was a musing and proposal from Trump, not from the lending industry.
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I think once the details are worked out/presented it might not be as appealing as many want or think it might be.

Should note it is a common sales technique used even when selling a 800 dollar tv set ie focus on the lower monthly payments and not the total cost. Stores try to sign you up for their credit cards using this tact. Car sellers notorious for it.
 
RambleTamble said:
It doesn't seem like that bad of an idea for renters who can't afford to buy a home, but keep having their rents raised at the end of each lease. If, instead of renting, they bought a house with a 50 year mortgage, they'd be in a stable situation. They'd know how much their payments would be from year to year. If they started to earn good money, they could refinance their homes.

Of course, 50 year mortgages will add more buyers to housing market, which will cause prices to increase even more.
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Not necessarily. If the taxes and insurance are escrowed, the payment will go up.

StarSong said:
Last night I had a little time to noodle around the web, and looked up 50 year mortgages. Banks are NOT offering them - this was a musing and proposal from Trump, not from the lending industry.
Click to expand...
Exactly.
 
The average homeowner keeps his or her mortage for about 7 years before they either sell the house or refinance.

After 7 years with a 50 year mortgage of $200,000 at 6% you will have paid off $4,496.10 of principal and you will still owe $194,503.90.
After 7 years with a 30 year mortgage of $200,000 at 6% you will have paid off $20,721.23 of principal and you will still owe $179,278.77.
After 7 years with a 15 year mortgage of $200,000 at 6% you will have paid off $71,573.06 of principal and you will still owe $128,426.94.

So with a 50 year mortage you are building almost no equity at all in those 7 years. Almost all of your payments are going to intrest. You are basicly renting money from the lender.
 
Now the administration is floating the idea of portable mortgages where a homebuyer would be able to transfer their existing mortgage and rate to a new home.

I’m not sure if they are also planning on being able to increase the balance at the original rate or not.

It all seems like trying to have your cake and eat
It too instead of just buckling down and buying a home like people have been doing for hundreds of years.

IMO rising expectations are more of an issue than rising home prices or rising interest rates.

The city that I live in has thousands of homes priced well below the national average that could be purchased and gradually renovated/improved by an ambitious couple looking for a family home.
 
Why don't the banks just admit that they're renting you the home but holding you responsible for the upkeep of the property.
The only time that eventual ownership is possible is when property values are within reach of a majority of people.
My grandfather owned 4 properties at the same time due to the Great Depression. He gave each one to each of his 3 kids as they married.
 

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