"The homebuying industry was jolted over the weekend by a President Donald Trump social media post that claimed a 50-year mortgage could be a game-changer for the housing market. Of course, no other details were announced. Still, the real estate industry's online community overwhelmingly thought this was a bad idea for house hunters, suggesting the two decades of added borrowing compared with the traditional 30-year mortgage would make modest savings not worth the effort."
"A top concern from the weekend's online chatter about a 50-year mortgage is the potential delay in owning a home mortgage-free. First of all, very few borrowers hold a 30-year mortgage for its full term. Refinancing or other early payoffs often through a sale end the mortgage. There's no reason a 50-year loan would act differently. So, why shouldn't a buyer grab a few years of savings?"
A 50-year mortgage proposal raises concern about delaying mortgage-free ownership. Few borrowers keep 30-year loans to full term; refinancing and sales frequently end loans early, so 50-year loans can also be paid off before maturity. Extremely high home prices make full payoff unrealistic for many typical buyers. Monthly savings of a few hundred dollars are meaningful for new homeowners who often spent nearly all available funds on closing. A spreadsheet compared a $500,000 mortgage as a 30-year loan at 6.25% and two 50-year scenarios at 6.25% and 6.75%. Expectations of substantially higher rates for 50-year loans may be overstated.
Read at www.ocregister.com
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