OT: 50 year mortgages?

[JimmyinSD]

I disagree with the idea that it isn’t the banks job to ensure the customer is making a smart decision.  Housing is a necessity.  If there aren’t enough houses, people will just borrow whatever the banks will lend them, which is way too much money, and it drives the price up for everyone.  There is nothing in the system that punishes banks from overlending.  Banks will give children credit cards that trap them in debt.  If you can’t afford your house, the bank just takes it back and resells it to a new sucker that prefers to live inside a building.  If they do it too much, they just have the politicians they bribe to make the taxpayer pay for it.  They are actively incentivized to push debt onto people as fast and as large as possible.  If we ever want to get out of this cycle of everyone being in debt up to their eyeballs, there needs to be some mechanism that restricts banks from overlending.

The problem that happens when you make it harder to get a loan, is that you are making it so that only investors can buy houses and that will push it further towards gen Z+ never being able to afford a home.  There needs to be some mechanism that prevents investors from buying property that should be going to home owners.  I think the local governments all need to gathering data on how many homes of each type (single family, condo, apartment, rental homes, airBNB, etc.) are needed to support the community, and if the quantity is below the threshold, they need to inhibit investors from buying those homes.  I don’t know the best way of doing that, maybe you just tax them at a higher and higher rate until they drop out of the market and put that money into a fund to be used as the down payment for a first time homeowner, or invest in new housing development or something.

There is no reason homes that aren't owner occupied aren't taxed at a significantly higher level.  Make an exception for a 2nd home st the lake or whatever,  but I agree,  there needs to be a financial deterrent to people buying up housing.  

However,  if people aren't smart enough to protect themselves,  there is very little we can do to help them without creating other issues.  It's a free country and if somebody allows themselves to get duped then I guess its unfortunate.   I would make the exception for minors mentally disabled, and elderly.

I just dont see how in a free market free country you can place enough safeguards without either being called discriminatory or other.  Seems to me there used to be more protections in place,  but those were deemed racist or other because low income people couldn't qualify and often those low income people were of other minority statuses.

Edit: and homes used as air bnb/ vacation rentals/ etc....definitely at much higher levels, really shouldn't be allowed as they are then more of a commercial property and are zoning law violations in most cases.

[hogjowlsjohnny]

Any instrument that makes more money results in more revenue for the government. The government doesn't protect it's citizens from economic predation; it encourages it! It's about money, not people.

[BigAl99]

Any instrument that makes more money results in more revenue for the government. The government doesn't protect it's citizens from economic predation; it encourages it! It's about money, not people.

I don't get the connection to government revenue, any profit from increased interest goes to the bank investors and hedge fund folks like be Scott Bessent, our Treasury Secretary. The additional years front load the interest portion by more than payment and also reduce any paying on the principal.  He was former partner at the Soros fund management and founded Key Square Group, a global macro investment firm.  He's the originator of this lifetime mortgage concept.  If it meant more revenue for the government it would at least be slowing down the rate of debt, which at least would have some benefit to the US.

[mblack]

It’s sad how this topic has ended up being about bad government instead of just stating the obvious… that idea being considered by Trump and his cronies (50 year mortgage loan term) is a bad idea for most Americans.

The main benefactors of this are the select few who are behind this agenda and the people enacting this and not the “people”. They are simply leveraging the power of the government to squeeze more money from the citizens and get richer.

This does not even deserve to be called government policy as it does very little to address and societal economic problems. It actually makes it worse by adding more risk and uncertainty (to an already laborious and long process) nor is it being requested by the broader community.

However there are people here either shifting the goal post, making all sorts of crazy assumptions, bringing up irrelevant and unrelated technicalities in an attempt to show how this MIGHT be a good idea or simply to further distract from the core issue.

[StickierBuns]

It’s sad how this topic has ended up being about bad government instead of just stating the obvious… that idea being considered by Trump and his cronies (50 year mortgage loan term) is a bad idea for most Americans.

The main benefactors of this are the select few who are behind this agenda and the people enacting this and not the “people”. They are simply leveraging the power of the government to squeeze more money from the citizens and get richer.

This does not even deserve to be called government policy as it does very little to address and societal economic problems. It actually makes it worse by adding more risk and uncertainty (to an already laborious and long process) nor is it being requested by the broader community.

However there are people here either shifting the goal post, making all sorts of crazy assumptions, bringing up irrelevant and unrelated technicalities in an attempt to show how this MIGHT be a good idea or simply to further distract from the core issue.

This ^

Its why I stopped posting in this thread, its gotten beyond ridiculous for the reasons you stated.

“Sometimes the first duty of intelligent men is the restatement of the obvious.” - George Orwell

[Waterboy]

It’s sad how this topic has ended up being about bad government instead of just stating the obvious… that idea being considered by Trump and his cronies (50 year mortgage loan term) is a bad idea for most Americans.

The main benefactors of this are the select few who are behind this agenda and the people enacting this and not the “people”. They are simply leveraging the power of the government to squeeze more money from the citizens and get richer.

This does not even deserve to be called government policy as it does very little to address and societal economic problems. It actually makes it worse by adding more risk and uncertainty (to an already laborious and long process) nor is it being requested by the broader community.

However there are people here either shifting the goal post, making all sorts of crazy assumptions, bringing up irrelevant and unrelated technicalities in an attempt to show how this MIGHT be a good idea or simply to further distract from the core issue.

This ^

Its why I stopped posting in this thread, its gotten beyond ridiculous for the reasons you stated.

WATERBOY

I'd love to hear these thoughts in more detail.  It sounds to me like both of you make a bunch of wild assumptions based on the fact that Trump surfaced the idea.  mblack is right about one thing, it isn't a govt "policy".  lol  That was about the sum total of the information that came out of the post.  

The people making the crazy assumptions are the ones who act like this is Armageddon.  This is a possible idea being floated, that executed correctly could be a viable alternative in certain situations and for a certain segment of the population that could spur additional homes being built down the road. 

mblack or Sticky, please explain to me how people discussing how a 50-yr mortgage might actually be a good idea in certain situations distracts from the core issue when the title of the post was (OT: 50 year mortgages).   Because it really seems like you wanted to just state your opinion, smear the orange man for being stupid, and have everyone just agree with you.  I think that's a little closer to the real progression of this discussion. 

If you wanted to discuss why housing affordability has went beyond the means of the average American right now, there are some very obvious causal factors relating to migration and a green agenda that we could discuss, but since Sticky wanted to be able to discuss this is in the main forum, the task was to discuss the virtues and pitfalls of a proposed 50 yr loan.  I think that was done over the course of the post quite well.

[mblack]

mblack or Sticky, please explain to me how people discussing how a 50-yr mortgage might actually be a good idea in certain situations distracts from the core issue when the title of the post was (OT: 50 year mortgages).  Because it really seems like you wanted to just state your opinion, smear the orange man for being stupid, and have everyone just agree with you.  I think that's a little closer to the real progression of this discussion.

At the bold:
My point through out this thread has been that the 50 year terms does not do much and adds the burden on the youth. It is a nonstarter and only helps a very very select few. I have explained that time without number on this thread without crazy extrapolations. The comment theme on how this MIGHT work (from those defending this) involves....

• If you are in your youthful and productive years
  
• don't have significant debt
  
• have a decent income
  
• don't have mortgage insurance
  
• buy a house in a good area
  
• when the interest is low
  
• Ok paying only interest till refinance (since the idea behind the 50 year is that you have a lower payment) meaning you are OK giving money to the banks (their whole point in the first place)
  
• and the value of your house does not depreciate.
  
• refinance after x years 
  

That is just not a solution as we are already dealing with this today. All this does is make a bad situation worse.
As I have said it does not make anything better for the common man. It simply plunges them into more debt, uncertainty, worry and an uncertain checklist of conditions they have to HOPE happen so they can get this .... ditch the 50 year term loan they signed. Doesn't that sound crazy to you?

Lastly, from an English language point of view...

• MAY suggests a stronger possibility, while MIGHT indicates a weaker possibility or greater uncertainty. 
  
• Both are used to express possibility, but "may" implies a higher likelihood than "might"
  

So the fact that you are defending an option that MIGHT (is less likely to) happen and that MIGHT (double conditions) only happen in CERTAIN SITUATIONS (situations that are mostly not applicable to everyday citizens and all would most likely need to be met) should give you pause. 
Maybe you should see my comments for what they are instead of assuming what my motivation is

[StickierBuns]

I'm not further addressing anything, lol. My thoughts and comments, with a link and quoting other's input I agree with, is all there in this thread. Like I said previously, this isn't a debatable topic. There's a right answer.

[Waterboy]

I'm not further addressing anything, lol. My thoughts and comments, with a link and quoting other's input I agree with, is all there in this thread. Like I said previously, this isn't a debatable topic. There's a right answer.

Yeah, that you are looking at it far too simplistically and mad that anyone dare disagree with you. lol

---

It's kind of amusing looking up the advantages of a 50-year loan on AI, and it is spitting out exactly what I expected it to. lol But, it's just positively stupid in all cases according to the experts on here. I bet they stayed at a Holiday Inn recently.

The primary advantage of a 50-year loan over a 30-year loan would be lower monthly payments, which could make homeownership more accessible or allow a borrower to afford a higher-priced home. This is because the loan balance is spread out over a significantly longer period, decreasing the principal paid each month.
Potential Advantages
Increased Affordability: The main benefit is a reduction in the monthly principal and interest payment compared to a 30-year mortgage, which could help first-time buyers or those in high-cost areas enter the housing market.
Greater Monthly Cash Flow: Lower monthly payments free up cash in a household's budget, which could be used for other financial goals such as building an emergency fund, making investments (which might potentially outperform the interest cost over time), or covering other essential expenses.
Flexibility and a "Foot in the Door": A borrower could use the lower initial payments to buy a desired home and then plan to refinance into a shorter-term loan (like a 30-year or 15-year mortgage) if interest rates drop or their financial situation improves. This strategy relies on the assumption that the borrower will not keep the loan for the full 50-year term.
Key Trade-offs & Disadvantages
It is important to note that these advantages come with significant drawbacks, and most financial experts caution that the long-term costs likely outweigh the short-term benefits:
Significantly More Total Interest Paid: The most significant drawback is the massive increase in total interest paid over the life of the loan. A 50-year mortgage could result in paying double the interest compared to a 30-year loan, amounting to hundreds of thousands of dollars more.
Slower Equity Accumulation: Due to the extended amortization period, you build home equity much more slowly. It might take 30 years to build the same amount of equity that a 30-year mortgage holder would build in 12-13 years.
Higher Interest Rates: Lenders would likely charge a higher interest rate for a 50-year mortgage to compensate for the increased risk over a longer duration. This higher rate would further diminish the monthly payment savings compared to a 30-year loan.
Increased Risk: Slower equity growth leaves borrowers more vulnerable to being "underwater" (owing more than the home is worth) if home prices decline.
Availability Issues: Currently, 50-year mortgages are not widely available as they do not meet the "Qualified Mortgage" standards set by the Dodd-Frank Act, meaning they cannot be easily sold to government-sponsored enterprises like Fannie Mae and Freddie Mac.

[badgervike]

It’s sad how this topic has ended up being about bad government instead of just stating the obvious… that idea being considered by Trump and his cronies (50 year mortgage loan term) is a bad idea for most Americans.

The main benefactors of this are the select few who are behind this agenda and the people enacting this and not the “people”. They are simply leveraging the power of the government to squeeze more money from the citizens and get richer.

This does not even deserve to be called government policy as it does very little to address and societal economic problems. It actually makes it worse by adding more risk and uncertainty (to an already laborious and long process) nor is it being requested by the broader community.

However there are people here either shifting the goal post, making all sorts of crazy assumptions, bringing up irrelevant and unrelated technicalities in an attempt to show how this MIGHT be a good idea or simply to further distract from the core issue.

It's sad that this thread turned out just to be an "orange man bad" discussion.  Depending on the payment terms (which NOBODY knows at this point), this could be beneficial for some.  I was more than happy to give you the numbers for home ownership and the reasons.  It is certainly not the panacea.  There are also discussions about reducing red tape / regulation, potential portable loans that can move from home to home, methods of reducing building costs, allowing penalty free withdrawal from 401k for first time buyers, etc.  Home costs have clearly gotten out of control.  The average age for a first home in this Country is now around 40 years old.  Tough to have kids in this environment which will only lead to same death spiral when our children grow up and don't have enough contributors to Social Security similar to the current baby boomer bubble.

We will never get back to the affordability of the past.  That went the way of the gold standard which has allowed pricing to exceed inflation.  Our kids have also reset expectations in terms of housing.  Some are comfortable in rental housing their whole life.  Those that opt for home ownership expect more than many of us had when we grew up.  Many of us grew up in a small home with a single car garage and shared bathroom...and only owned one car.  Expectations have changed.

In terms of risk, is this REALLY riskier than balloon or variable mortgages.  Balloon mortgages have been around since the early 1900s.  Let's see...fixed payments over a lifetime vs lower payments and a big balloon payment.  Which one involves more risk?  

As a business owner, I'm certainly willing to take on more risk than some.  I get it.  It's not for everybody.  There haven't been many times in the last 20 years that my home wasn't listed as collateral on something related to the business.  It's just the nature of the beast as you grow a business.  As Al pointed out, he would never put his home in jeopardy.  That's fair.  Some of us will take the risk for the reward at the end...some won't.  Doesn't make one right or wrong.

All of the hostility and teeth gnashing over this is a little silly.  Virtually nobody would get a 50 year loan...to carry the loan for 50 years...just like virtually nobody will get a balloon loan to pay off the balloon at the end.  

IF the payments on a 50 year loan are significantly lower than a 30 year loan than it makes some sense to use the lower payments to build some wealth.  If the difference is negligible, than it doesn't.  Both are effectively interest only payments for 10 years.  It's really that simple...and since we don't know, the rest is conjecture and hyperbole.  Yes...it's all money going to a bank.  But the alternative, renting, is all money going to a landlord so not sure where the big difference is.  One is building equity for the homeowner (on average) and is building equity for the landlord.