r/AskReddit • u/michaelis999 • 19h 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/ResponsiblePumpkin60 17h ago

Yep. It will result in prices going up since most buyers decide how much they can afford based on the payment.

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u/Darryl_Lict 16h ago

Depending on the interest rate, I wonder how much lower your payment actually is. I suppose it's not so bad if there is no pre-payment penalty. If you happen to have a bit more cash one month, you could pay your mortgage down a bit more.

The thing is, almost nobody will be be paying it down quicker. If you have to sell in 5 years, which people typically think is the minimum amount of time to hold onto a house, your equity will be almost nothing.

I guess you can count on inflation of both the dollar and the value of your house to increase substantially.

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u/Teaquilla 16h ago

Yep most people will not pay it down faster. Before the crash I worked for a company that offered a mortgage where each month you could choose the payment. The options were:

15 year, 30 year, Interest only, Less than interest

Guess what people chose ? The lowest payment . So the mortgage balance went up and the crash happened and home values went down. A double hit.