I can't believe nobody is talking about 50 year Mortgages

[ua_guy]

An example of how bad 50 year terms are for building wealth:


A $500,000 home with $100k down ($400,000 financed):

Over 50 years at 6.8% means you pay a staggering $1,007,404.08 in interest charges over the life of the loan.

On a 30 year, with a slightly lower rate (typically 0.5 less), same amount financed, 6.3%, you pay "just" $491,321.54 in interest charges over 30 years.

On a 15 year, let's just assume the same rate 6.3%, you pay $219,308.26 in interest.


If the market is truly deciding here, top government administration officials shouldn't be pushing affordability and accessibility measures in the same way a buy-here, pay-here car dealer would. "We'll just lower the payment!". Particularly, administration officials who are engaged in the business of building, selling, and builder-financing homes (Pulte).

Mortgages have long been demonized, but they have been deemed necessary to spread out the cost of buying a home to support traditional american values of home ownership at a young age, building families, and a basis for building wealth/economic stability. The actual cost of building a home is significant for most people even when subtracting out market premium for land, home value.

It's no longer a radical idea that some mortgages and car loans are modern forms of indentured servitude. They keep the majority of people in this country who can barely afford them, poor and working.

[LivingAlmostLarge]

well when car loans at 7-10 years it's no surprise that they propose 50 year mortgages

[kork13]

I forget which country it is that I've visited, but I was told that the typical home mortgage was something like 60 or 70 years. You buy a house in your 20s & hope that you live long enough to pay it off. I remember that real estate was stupid expensive. Typically, multiple generations lived in the same house, and handed the same house down through generations.

[Fishindude77]

If we are going to demonize 50 year mortgages, we'd need to demonize all mortgages. Who decides what is reasonable? 50 year? 30 year? 15 year? Leave it up to the markets to decide.

Good point. I think a 30 year duration to pay off a home is pretty ridiculous. Buy it at 30 and not paid off till 60?
Due to HELOCs and Re-financing there are quite a few folks out there that make payments on the same home for longer than 30 years.

[james.hendrickson]

The point about the 50 year mortgage is...you'll spend your whole life paying a bank. Thats no way to live. What about freedom and independence? Or what about financial security? Or not having a bank control your life? Or what about the psychic benefits of not having a ton of debt?

[ua_guy]

I forget which country it is that I've visited, but I was told that the typical home mortgage was something like 60 or 70 years. You buy a house in your 20s & hope that you live long enough to pay it off. I remember that real estate was stupid expensive. Typically, multiple generations lived in the same house, and handed the same house down through generations.

Yes, longer terms are more common in European countries, but not "typical", is my understanding.


As for 30 year mortgages in the US, I believe it was more common to take out a 30 year term but repay sooner. Now it's becoming more common to have to ride out the full term.

[disneysteve]

Introducing longer mortgages is ignoring the disease and just treating the symptoms. 50 years ago the median home price was less than 3 times the median income. Today the median home price is more than 5 times the median income. There's also a tremendous housing shortage which skews the supply and demand curve and drives up prices. New home building has not kept up with population growth. Add in ever-growing income inequality and here we are. So sure, a 50-year mortgage might help some people get into a house they couldn't otherwise "afford" but it does nothing to actually address the cause of the problem and just kicks it further down the road.