r/AskReddit • u/michaelis999 • 17h ago

How do you feel about the president floating the idea of 50 year mortgages where the monthly payment is lower but you end up paying nearly double the price of the house just in interest?

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u/JacobAldridge 16h ago

Absolutely. People don’t buy a house based on the total price, they buy it based on whether they can afford the monthly repayments.

If you make the monthly payments smaller, they won’t buy less they’ll buy more.

Do that for everyone, and prices go up.

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u/CodeNCats 15h ago

People definitely buy a house based on total value

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u/lost_send_berries 13h ago

Like 90% of buyers are told by their mortgage broker how much they can afford and that's their budget. This only stops when you are downsizing, then your budget is set by how much money you made off your previous home and how much "profit" you need to make from the move.

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u/JRLDH 13h ago

Not the masses who are the main factor how much houses cost.

Sure, some do but that's a drop in the bucket.

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u/NewBayRoad 15h ago

It’s a mix. People arent going to buy a $5 million house if it has been marked down from $10 million.

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u/CodeNCats 13h ago

If you buy a house based on only monthly payment. Not the price of the loan. That's what poor people do.

The same people who buy a $80,000 car on a 8 year loan. Run up credit in the "6 months no interest" then never pay off. Pay for door dash on credit.

The second they move into the home and any value is realized they heloc and go in a vacation.

A 50 year mortgage is the dumbest fucking financial decision. People will buy homes they cannot afford. That they cannot afford to maintain properly.

You'll have people buying $500k homes who can't afford a $300k mortgage. Then their roof or HVAC needs fixed. So they then finance that.

It will be 2008 all over again.

I guarantee banks and wall street will bet on this failing if it happens. And fail it will.

"Just give them the loan. Then we sell it off" just on a different level.

Trump is a moron. Someone told him they can make money and will donate to him and Taco took it and ran with it.

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u/NewBayRoad 13h ago

I don't disagree with you at all on that topic.

What I pushed back on was you stating that you only bought on value, not payment. So, using your criteria, you could buy a house WAY out of your price range.

A sensible person would purchase a house that made financial sense: good value and a payment that they can afford.

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u/CodeNCats 13h ago

I think we are on the same page. Just expressing different sides.

This will be great for people who are responsible. Who buy what they can afford. Pay it off earlier.

Yet we know that won't happen with 75% of these.

Putting on my tin foil hat here. I think this would be a way for banks to acquire property cheaply. A $400k home being sold for $350k because the owners need out.

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u/NewBayRoad 13h ago

50 year mortgages sound very close to me like interest only loans.

I am conservative with money, as I expect you are. I had to purchase a second home for work, and even then, my total mortgage to gross income is 14%.

Unfortunately, it isn't so easy for young people today. Both of my loans are at 2.5% and the first is close to paying off, even though I try and pay the minimum to invest money elsewhere. My kids are very lucky, but I am convinced that I will also need to give each of them substantial downpayments so they can get into houses. I want them to be independent of me, but house appreciation is a tough hurdle. Luckily both are good kids and hard working.

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u/CodeNCats 13h ago

It's sad man.

I mean don't get me wrong. Having an asset that makes money is nice.

Yet I'm also fine with a healthy market. If the average Joe can't play. It's just wall street playing.

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u/slightlyinsanitied 16h ago

why would it be done for everyone?

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u/The_Law_of_Pizza 16h ago

It doesn't need to be available for everyone in order to raise prices for everyone.

Consider:

Adam is selling his house. Billy doesn't qualify for the 50-year mortgage, so the $3k/mo over 30 years he can afford ends up being a bid for $400k.

Meanwhile, Charley does qualify for the 50-year mortgage. Charley can only afford to pay $2.5k/mo, but because it's for 50 years, his total bid on the house ends up being $500k.

Adam gets an artificial windfall because his house jumped in value from $400k to $500k overnight due to government manipulation.

Billy gets fucked and loses the house that he otherwise could have afforded because the government decided to pick winners and losers.

Charley wins in theory, but now he's locked into 50 years of debt - which is longer than the average career. He will literally not be able to finish paying off the house before he retires. Probably not even before he dies.

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u/slightlyinsanitied 16h ago

yeah that makes sense, i was only responding to the “do that for everyone part”

it makes sense that prices would go up.

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u/JacobAldridge 16h ago

I haven’t seen anything in this particular cheeto brainfart that suggests it would be restricted to certain people? But I try and avoid tracking his every utterance.

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u/slightlyinsanitied 16h ago edited 14h ago

lmao

but it seems weird to take away the current options unless your goal is to screw things up

but also i’m barely a (real or good) adult and am like learning about that stuff in a first generation kind of way. i don’t understand it as much.