50 years a mortgage

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.

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Heaven.

It is pure greed

The homies and I were eating lunch at a Shake Shack. The gentleman next to us friendly interrupted us to ask whether or not the food there is worth it. I bluntly replied a resounding no. $20 for burger, fries, and drink will forever be too damn high, no matter how gourmet it is (I would say Shake Shack is only slightly above McDonald’s). The only reason we were there for lunch is there was a buy-one-get-one offer on the Shake Shack app.

Apps are downright mandatory these days when eating at chain restaurants. Most will have deals that aren’t advertised in-store. The gentleman was bemoaning the fact he did not know about the free burger offer. In these times of inflated eating out costs, app deals are the only way to get me to spend money at restaurants. (Unless I’m eating with others.)

Speaking of inflated costs: can someone explain how can banks possibly charge $5,000 for simply closing on a mortgage? This feels like pure fat off the top, doesn’t it? The institution is already making money on the loan by adding points on top of the benchmarking lending rate! You mean to tell me that it cost $5,000 for a few people to crunch the numbers (I concede that underwriting due diligence requires some labor) and press the return key on a keyboard?

Worse: when it comes time to refinance - with the same bank - you will get charged another $5,000 for closing that. For what is presumably a formality! The bank knows your information already, and have records of you paying on time. Unless the borrower is completely upside down on house, all the bank has to do is rearrange the numbers internally. And for that, the easiest $5,000 made ever. Even a Porsche cars salesperson would blush at such wetting of the beak.

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We fly high.

Straight cash, homie

It’s always a bit nerve-racking when bringing a relatively large stack of cash to deposit at the bank. What if I get robbed before I get to the location? Lots of AAPI hate going around these days. What if I get pulled over by the police while I am still in the car? Civil asset forfeiture is a thing: I would have to prove to the authorities the cash is clean and kosher. Guilty until proven innocent - imagine that in America!

While waiting in line for the next available teller, a helper person asked me if I want to use the ATM instead. Heck no! Last thing I’d want to risk is the machine eating up the bills and causing a huge headache. I’ve also seen ATMs outright reject otherwise good bills. Any count above 10, it’s better to deposit with a real person. They’ve got those fancy bill counting machines that goes through a pile quickly and accurately.

A couple next to me was doing a wire transfer. They’ve just closed on a home, and were super excited. Their teller wished them congratulations, to which they replied, “Thanks! But now we’re house poor!” Indeed that’s the reality: there’s really no homes around here that isn’t above seven-figures. Anyone not making tech-bro money will be stretching to make the mortgage. Not to mention the exorbitant property tax every year - no prop 13 protection for you!

I have zero illusions that I can purchase a home in San Francisco any time soon, if ever. Not on this government employee salary! Besides, I don’t want the inflexibility of being tied down to a property for an extended period. It’s not that I plan to go anywhere; it’s because having a mortgage payment changes the calculus of how you approach employment. The stakes are higher: you can no longer afford to tell your boss to fuck off.

Those are the shackles!

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Against all odds.