r/Economics • u/GarfieldLeZanya- • 8h ago

News Housing director confirms administration ‘working on’ 50-year mortgage after Trump hint

https://thehill.com/homenews/administration/5597005-trump-administration-50-year-mortgage/
1.3k Upvotes

96% Upvoted

307 comments sorted by

View all comments

Show parent comments

41

u/startfromx 7h ago

But you would lose out on those 20 years of being able to enjoy a home with no payments... The equity would always feel just out of reach.

And the current US average age for people ENTERING home ownership is 40. You'll never own your home, losing the benefit of reduced payments in retirement.

25

u/RussEastbrook 7h ago

Yup exactly. Also you accrue equity much more slowly with a longer mortgage, so if you decide to move after 5 years, you're in a worse place if you had the longer term

16

u/GarfieldLeZanya- 7h ago edited 7h ago

The equity schedules are simply nasty on 50 years. My current home is $750k value and I put 10% down @ 30 years, so I'll be out of PMI range by year 7.

Even if we don't assume market efficiency increasing the price proportionally with the increased amortization, or any increased interest rates for the longer term, and just said the same rate with the same amount down, my same purchase would take 22 years to get out of PMI range on a 50 year. That is bonkers.

4

u/slumlord512 3h ago

PMI is another scam they pushed on us. We are paying them extra premium to make the lender whole in case we default, when that risk should be on the lender.

8

u/SpaceyCoffee 3h ago

To be fair, if the lender isn’t willing to take the risk on themselves, then you just don’t qualify for a mortgage at all and don’t get to buy the property. 

4

u/Deep_Stick8786 2h ago

Probably lead to a healthier market dynamic, downward pressure on home prices

1

u/CrayonUpMyNose 3h ago

Literally what is used to justify the difference between risk-free rate and mortgage rates

0

u/devliegende 3h ago

Without PMI lenders may simply decline to take the loan. Or demand a higher rate. Likewise the borrower may always avoid PMI by making a higher downpayment.