President Trump is floating the idea of a 50-year mortgage loan, superseding the current standard longest of 30 years. I think it’s a wonderful idea, because I can finally afford a home around here! All it takes is for a bank to practically own me for the rest of my life. If I were to buy a house today and it’s a 50 year loan, I will be 87 when the final payment schedule hits. Will I even be alive by then?
In simplistic mathematic terms, the 50-year mortgage makes sense. Housing is expensive, so let’s extend out the loan term so people can “afford” it. It’s the same thing happening in the automotive industry. The average new car price crested over $50,000 recently. Along with it are ever longer loan terms. 60-month used to be the maximum standard, but now 72 or 84-month is popularizing. Just so folks can squeeze in a monthly payment that is somewhat palatable.
Is that not a similar goal in floating a 50-year house loan? Perhaps it’s too big of a jump from 30? For sure 50 years will be more than half a lifetime for most of us. Also, think of the amount of interest that’s going to be paid for a loan that long. You can more than likely buy a whole other house on total interest payments alone.
But I think it’s a problem only from an investment lens. For a home that you want to stay in forever until death, a 50 year loan doesn’t seem that ridiculous. So what if the cumulative interest payments amount to a crazy high number? The most important number is for the monthly mortgage cost to come beneath an affordable threshold. Indenturing myself to a bank for the rest of my life is quite alright if I get a stable and comfortable home in return.
Surely the banks also wouldn’t mind that extra 20 years of accrued interest! I think mortgage terms longer than 30 years should be made available; as a tool, an option, but not a panacea to a problem.
Heaven.