At the current prime rate of 7%, changing a loan from 30 years to 50 would reduce payments by less than 10%. Just a terrible idea.
Shit, even at historic lows of 3% interest it only drops the monthly payment by about 25%, but increases the total cost of the loan by 80%.
Its absolutely a terrible idea.
Can they stop being so ridiculous that this woman has a chance to make sense? God,at the beginning of a 30 year mortgage, you are already paying mostly interest. Cut some of the principal off and now you are paying a couple hundred bucks less at most. Will they offer lower interest rates or will they jack up 30 year interest rates?
This is Trump we’re talking about here. He will make this as self-serving as possible if it should even come to fruition. It will also be the absolute worst deal for anyone gullible enough to get on board. Think about these 10-year car loans and the like…people are taking them.
Do we even expect a modern house to still be intact in 50 years? Hell, can anyone expect to survive 50 more years the way things are going? Shit, maybe i will get in on this after all, lol
Interest should be illegal
The end result of this is everyone buys homes and cars in cash or they just invent something that is interest without calling it interest. They have that for certain religions who have a faith-based objection to interest. It seems dumb to me, but apparently structuring it with the interest rolled into the principal and called something else makes god happy.
Dumbest idea in here.
The 30 year mortgage was a mistake now 50? Lol so most home buyers won’t start paying down the principle of the loan until 35 years into the mortgage?! Banks are so turned on by this idea. Even more so with American having a massive economic downturn every 5 years.
I also worry home prices will jump to eat up any monthly cost differences, too. Like okay your 50 year mortgage is $100 less a month but we increased the price of the house by $50000 so unless you’re already a homeowner (and plan on renting next) then you’ll be further priced out of the market.
How many years would a loan have to be before it would just be considered rent? Is that the plan? Never let anyone own anything, just keep paying “rent”?
The amortization length affects proportion of principle paid down, but it doesn’t eliminate it entirely. At the same interest rate, you end up having paid more in interest at maturity of a longer amortization, yes. In practice, this can be mostly mitigated by negotiating a lower rate, or negotiating and exercising prepayment privileges.
More importantly, with a mortgage, ownership of the property is yours entirely, from day one, not the lenders’. What you owe is cash, not the property. The property is merely collateral in the event of default of payment.
BTW, multi generational loan agreements are not new. They are somewhat common historically and in other places of the world. For the same reason that multigenerational housing is the historical norm.
Nice, you just buy a house when you’re 10 years old and you’re good to go
You know what you need to get mortgage? A job.
Time for those 10 year olds to put their little hands to use in the new electronics factories and start earning their living!
I’m thinking we’ll probably start interning children around 5 or so–that way they can really ‘hit the ground running’ when they reach 10. 5 years experience before starting their first career! If only I had been given a headstart like that!
Or, raise the retirement age to 75
How many 25 year olds are out here buying houses
Why stop at 50? Let’s start multi-generation mortgages. You can pass down your debt to your loves ones for them to remember you by
Average first time home buyer age is over 40 atm. So, banks guns go fer that?
Yeah its basically free money. Someone pays rent and they take the house for resale when they die or cant pay.
The law of unintended consequences says that this will just result in more douchebags buying $3 mil houses because they can “afford the payments” and plan on dying before they ever fully pay it off.
The con of extended loans is so well known. 🫠
