You know better than this. It’s leveraged investing. There are people that can’t afford payments on a 30 year. If they could get into an asset for 500k that appreciates to 700k in 5 years, what does it matter? You can sell that home, use your gains to put more down for a better deal 5 years down the road.

This is not good for the 50-year mortgage. The analysis shows that the monthly payments on the 50-year loan would be only 12.2% lower than on the 30-year loan. But that assumes the interest rates are the same. The interest rate on the 50-year loan is likely to be 0.3-0.5% higher. The higher interest would make the monthly payment on the 50-year loan higher and the difference in payments between the 30-year and 50-year loans even smaller. With such a small difference, taking out a 50-year loan is not likely to help buyers qualify for a mortgage by lowering their debt-to-income (DTI) ratio significantly. "A 50-year mortgage would likely have an interest rate about 0.3% to 0.5% higher than a 30-year mortgage. This is because the longer loan term is considered riskier for lenders, leading to a higher interest rate to compensate for the extended period. Higher rate: For example, if a 30-year fixed mortgage is at 6.0%, a 50-year fixed mortgage might be at 6.5%." Source: Search Labs AI

well i remember clearly the note saying payments were applied equally to principle and interest. Thank you for clarifying — you are absolutely right to remember that. Your **1970s/1980s mortgage note did say payments were applied equally to principal and interest — because that was a real, legal loan type called a "Level Principal Payment" or "Equal Principal + Interest" loan (sometimes called a "straight-line" or "constant principal" mortgage).

What most people are missing here is that changing from 30 to 50 year amortization only reduces payments by roughly 10%. Big enough to “pave another lane on the freeway to fill back up with traffic”… but not enough to feel significant to families when the cost of a burrito is pushing $20.

Mortgage should not be interest based. They should be fee based. For example a $250,000 loan with an additional fee of $25,000 dollars or build it into the payment schedule with Zero interest. Lender makes $25,000 on the loan. Pay the fee up front and have an agreed upon term to pay back the $250,000. The current system is built on greed of the banking/mortgage system.

That is if you only make the minimum installment on your mortgage every month. Add an extra $10-$20 of principal payment every month and you will see the principle of your home going down much faster. Plus, you can always refinance to a better loan as market condition conditions allow. I don’t know. I would much rather see young people get into something like a home rather than paying $2800 a month for rent and retain nothing.

🧵 50-Year Mortgages…..How to Help Buyers …..Not Just Banks Trump & FHFA want 50-yr loans to lower payments. …….But at 6.575%, buyers pay 2× the interest 😱 Here’s how to fix it 👇 (Example: $400,000 loan) ✅ 50-yr term → lowers monthly payment to $1,822/mo (vs $2,038) ✅ Cap the rate at 5% → cuts total interest to $518k (vs $693k) ✅ Stop charging interest after 30 yrs → saves $174k ✅ Make years 31–50 principal-only (~$1,111/mo, 0% interest) ✅ No prepay penalty → refi anytime, total freedom 💥 Result: •Same low payment •~$518k total interest (like a 30-yr!) •Banks still profit •Buyers finally win Policy Fix: 1️⃣ FHFA → make 50-yr loans QM w/ 5% rate cap 2️⃣ Fannie/Freddie → 30-yr interest / 50-yr term 3️⃣ CFPB → ban prepay penalties 💥 Won’t banks just say no? They still earn 5% for 30 years on a $400k loan ….about $260k in interest, roughly the same net they make on a 30-yr at 6.575% after early prepayments. 💥And if rates drop to 3%? Borrowers can refinance out, penalty-free, into a new 30-yr at 3%. The 50-yr becomes an option…not a trap.

Usury needs to be properly mitigated and outlawed in some capacity. What we need is less amortization schedules and more flat rate fees. 300,000 home loan, 50,000 “fee” that gets paid back first off of the mortgage payments. Total amount paid 350,000 not 750,000z

Not that big of a problem if you factor in inflation and other opportunity cost. If you had $800k in cash and bought the house, you would save in interest, but if you took a loan and invested the $800k you would be much better off in the end based on historical average returns.

Btw the interest rate for the 50 year loan will be much higher than the 30 year term.

Why is everyone rushing to say what is wrong before @POTUS and @pulte have presented a plan? At least they are looking for solutions!

But if you had taken the difference $585 and invested it monthly in an investment gaining 7% over that 50 years it would become $3,200,000. So, if you are having to take that 50yr mortgage because you otherwise can't afford the payments, well, it sucks, but you could afford the monthly payments. It would be best to refinance when you can along the way for a better rate. But if you are saving money that you are investing, then it could be a good deal. Even for someone who initially could just barely make the payment because likely within the first 5 years their income would go up enough to start investing. The sooner you start interesting, the better.

The point isn't for long-term ownership, it is for new home buyer qualifying for debt service coverage tests by keeping the amortization down. Better than having to do an ARM to achieve same.

@grok Historically, it’s a good idea from Trump’s move from a 30-year mortgage to a 50-year mortgage, as it visually demonstrates which option is better in the long run.

You forgot the yearly California property tax which banks add to their equations. As well mortgage insurance which is a big scam. Remove both of those and then it’s just a mortgage deal.

No one has to accept a 50 year, they can use it as leverage and trade up to quicker and cheaper payoffs as their circumstances change. Or jut rent if that makes more sense.

Interest rates increase as the term of the loan increases. It would not be 6% for both loans you have in your model. If you assume a linear difference in interest between a 30–>50 year as exists between a 15->30, it would be nearly a point higher. This means the payment would be a couple hundred dollars lower monthly and total interest paid on the loan at maturity would double.

50-year mortgage makes no sense. Lower interest rates are needed, and cut to 20 or 15 years.

My parents bought their home in 1982. Their 30-year mortgage was at 16%. They paid it off in about 12 years , after about 5 refinancing rounds. They are the only humans I know tha went the entire 30 years and still live in the same home. Are there others? Of course, but we stay an average of 5-7 years and buy up or move. No one is going to pay that entire interest amount - ever. And certainly nobody will be buying a home with a 50 year mortgage after the age of 35-40, expecting to never finance and pay the entire interest on that note! There is math, and then there is reality! This is a stopgap that gets people in a home NOW. You can always convert to a 30 or 15 later. If it were me, offer a 100 and a 1,000 year mortgage.

Interest is not the problem. Fiat money is the problem.

For most: it’s a qualification / cash flow issue. Once acquired and approved; borrowers can prepay and adjust their payments as needed with minimum obligation lower than the shorter amortization. Over life of the loan, yes, a lot more interest paid.

interest is the problem and who, but the jew, loves their interest ... as far as I'm concerned any interest over 1% is usury. As, exactly what do bankers add to society? I'm aware of what doctors contribute, architects, engineers, plumbers and electricians but bankers ...

The overwhelming factor is at what pace the dollar depreciates over 50 years. Depending on how that goes, your 50-year mortgage might become a genius move or a bonehead move. I dunno how to play that one, a lot will happen in 50 years.

You know I’ve been trying to explain this to people and they don’t get it. They’re saying I’m wrong. It’s the interest if you put it out 50 years you’re paying 100 times more for the house basically.. thank you

I've also doesn't have to live in California. My 4 br 2 bath 1900 sq ft home in ABQ is half that. I'm a good neighborhood. $1800 on a 50, 2k on a 30.

The price of houses needs to come down, both new and used. Deregulation, deporting illegal aliens, reducing interest rates could all contribute.

Yes, it is. I bought in 2015 in Florida at 3.25% VA loan. I refinanced a couple of years later at 2.75% which is where I am currently. I’m truly blessed to have it and I wish others could get it as well.

Let’s change that equation to account for the average length of home ownership, which is 11.8 years. Based on the current average interest rate for a 30 yr, and let’s keep it the same for a 50 yr for comparison purposes although it would likely be higher, the average home buyer with a 50 yr would save $54k over the time they owned the home. But the bigger question is equity. They would pay down almost no principal, so any equity would be from property values rising - which they would dramatically due to more buyers (demand) and limited supply. Bottom line: banks make more money, young people get into home ownership, then build equity from rising values, can later refi to a 30 yr, or sell after 12 yrs and buy something on a 30 yr, the upward pressure on rents might be countered by less renters demand because they can now buy a house instead. Rents might actually go down, allowing for more affordable housing for that segment. I don’t know… what do you all think? Good or bad?