"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?"
"Additionally, consider the current state of ridiculously elevated home prices. Barring a sharp decline in values, paying off the mortgage may no longer be a realistic goal for the typical homebuyer. Plus, one shouldn't quickly dismiss savings of "just a few hundred bucks" a month. That's real money to new homeowners who likely spent almost their last penny to close the purchase."
President Donald Trump's social media post proposed a 50-year mortgage without details, prompting widespread skepticism in the industry. Critics argued that adding two decades of borrowing would make modest monthly savings unlikely to justify the longer term. Very few borrowers keep a 30-year mortgage to maturity because refinancing or selling typically ends the loan, so a 50-year mortgage might also be paid off early. Persistently elevated home prices make fully paying off a mortgage unrealistic for many buyers. Small monthly savings of a few hundred dollars can matter to cash-strapped new homeowners. A spreadsheet compared a $500,000 mortgage across 30- and 50-year scenarios at realistic rates.
Read at The Mercury News
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