Trump proposes 50-Year Mortgage

  • Thread starter Thread starter nycfan
  • Start date Start date
  • Replies: 129
  • Views: 3K
  • Politics 
tarheelbillie said:
Twice the interest or more...that's the scam! And many, maybe most, would not live long enough to ever actually own the home. Imagine the total interest in times of big inflation. In 1983 rates were as high as 15%...run that one thru an amortization calculator. A FUCKING SCAM... not surprising considering the source. Not to worry... Congress has our back. ;)
Click to expand...
In almost all cases, you aren’t actually paying the loan for 50 years. Or for 30 years. The vast majority of loans are paid off or refinanced within 7 years. This idea that you get a single loan on a house that you pay for 30 years is mostly conceptual. It very rarely happens.

So you aren’t paying double interest in reality. And it most definitely is not a scam. Whether it would be a net positive for society to give greater options to consumers is a legitimate question.
 
05C40 said:
When my wife retired after 40 years at the same company, all of those years with a company car with unlimited personal miles, she had some new car sticker shock. She absolutely refused to just buy the car, claiming she could get a better deal if she financed it. I rolled my eyes. So I asked the car salesman how quickly I could pay off the loan and not effect his commission. He replied, "Just make more than four payments." I made five. Silliest exercise in "jump through the hoops" I have ever subjected myself to.
Click to expand...
I have a couple of friends that are car sales people, I've been told the same thing. Make 4 payments and they get the money from the finance company.

It is a shame that we have to play the games to get the best price.
 
Calheel said:
In almost all cases, you aren’t actually paying the loan for 50 years. Or for 30 years. The vast majority of loans are paid off or refinanced within 7 years. This idea that you get a single loan on a house that you pay for 30 years is mostly conceptual. It very rarely happens.

So you aren’t paying double interest in reality. And it most definitely is not a scam. Whether it would be a net positive for society to give greater options to consumers is a legitimate question.
Click to expand...
Sure…pay off early and save big. I’ve never had a loan I didn’t pay off early. Plus, I’ve borrowed because my investments earned more than the cost of the loan. But that is our good fortune…folks who have the means.
 
A 50 year mortgage is wild to me. We had a 15 year on our old house but went to a 30 year on the new house for a more reasonable (but still higher than I really wanted) monthly payment. I miss that cheap 15 year 2.75% mortgage payment.
 
Portable mortgages sound like a more viable option. The questions I have are if there is an investor market for this kind of product and if so at what price? My suspicion is that given this type of mortgage would almost certainly have a longer average outstanding term, there would be a rate and/or spread premium. On the surface it does seem like something that would free up the market. Wouldn’t be an immediate impact because I don’t think people would be able to convert their mortgage today without moving to a higher interest rate.
 
JFC. The people who are defending 50 year mortgages might as well get to work selling whole life insurance, reverse mortgages, pay day lending or rent to own VCRs.
 
NCK9 said:
Click to expand...

I think this will do more to free up the housing supply in the short term. It will allow more people to move, especially retiring boomers that may want to move to a lower cost of living area.

Long term, the biggest things that are going to free up housing supply is loosening the local rules on development and boomers dying off.
 
Last edited:
gtyellowjacket said:
I think this will do more to free up the housing supply in the short term. It will allow more people to move, especially retiring boomers that may want to move to a lower cost of living area.

Long term, the biggest things that are going to free up housing supply is loosening the local rules on development and boomers dying off.
Click to expand...
The world is so simple in contrarianismland.
 
Calheel said:
In almost all cases, you aren’t actually paying the loan for 50 years. Or for 30 years. The vast majority of loans are paid off or refinanced within 7 years. This idea that you get a single loan on a house that you pay for 30 years is mostly conceptual. It very rarely happens.

So you aren’t paying double interest in reality. And it most definitely is not a scam. Whether it would be a net positive for society to give greater options to consumers is a legitimate question.
Click to expand...
Then just do a partially amortized loan and be done with it. There are already a thousand different options.
 
NCK9 said:
Click to expand...

So, it really is just a guarantee of the same size loan on the same terms for your next house. Why would a lender agree to this for any existing loans below current market rates? Spoiler alert: in current conditions, they won’t.

Presumably, this would have to be limited to new mortgages originated after rules for portable mortgages are established. You still have to pay off the existing mortgage and borrow anew and the terms are probably only portable for an equal or lesser principal amount. If you buy a more expensive house and need a larger principal amount, my guess is the right to retain the mortgage terms would no longer apply. Do you have to pay a premium on the initial mortgage for a portability rider?

I’m not against this in concept, just questioning how it would work in practice and doubting any immediate impact on the housing market.
 
nycfan said:
So, it really is just a guarantee of the same size loan on the same terms for your next house. Why would a lender agree to this for any existing loans below current market rates? Spoiler alert: in current conditions, they won’t.

Presumably, this would have to be limited to new mortgages originated after rules for portable mortgages are established. You still have to pay off the existing mortgage and borrow anew and the terms are probably only portable for an equal or lesser principal amount. If you buy a more expensive house and need a larger principal amount, my guess is the right to retain the mortgage terms would no longer apply. Do you have to pay a premium on the initial mortgage for a portability rider?

I’m not against this in concept, just questioning how it would work in practice and doubting any immediate impact on the housing market.
Click to expand...
This is where I am. Payment comparisons using the same rate for the 30 vs 50 are silly because we know that is not going to ever happen. The up front fees will be higher. The rate will be higher. If they aren't government backed, no lender is going to touch them at high LTV so nobody new comes into the buying picture anyway. If they are government backed, the risk pool for FHA/VA/USDA grows astronomically so the charges for rhat mortgage insurance go up on every borrower in those programs further exacerbating the issues.
 
nycfan said:
So, it really is just a guarantee of the same size loan on the same terms for your next house. Why would a lender agree to this for any existing loans below current market rates? Spoiler alert: in current conditions, they won’t.

Presumably, this would have to be limited to new mortgages originated after rules for portable mortgages are established. You still have to pay off the existing mortgage and borrow anew and the terms are probably only portable for an equal or lesser principal amount. If you buy a more expensive house and need a larger principal amount, my guess is the right to retain the mortgage terms would no longer apply. Do you have to pay a premium on the initial mortgage for a portability rider?

I’m not against this in concept, just questioning how it would work in practice and doubting any immediate impact on the housing market.
Click to expand...
My understanding is it lets you 'port' your existing mortgage over to the next house.

Buy house A and borrow $350k at 4%. You live there for 10 years and make required payments.
You then buy house B (and sell house A) and can bring the house A mortgage over with you. $275k remaining on that loan at 4% for 20 more years. You then take out a 2nd loan at market rates for the remainder of house B.

As a lender, a portable mortgage would be better than an assumable mortgage as the borrower remains the same and more often than not, they are moving to a nicer property.
 
NCK9 said:
My understanding is it lets you 'port' your existing mortgage over to the next house.

Buy house A and borrow $350k at 4%. You live there for 10 years and make required payments.
You then buy house B (and sell house A) and can bring the house A mortgage over with you. $275k remaining on that loan at 4% for 20 more years. You then take out a 2nd loan at market rates for the remainder of house B.

As a lender, a portable mortgage would be better than an assumable mortgage as the borrower remains the same and more often than not, they are moving to a nicer property.
Click to expand...
Your understanding does not seem to match the early reporting but makes more sense. But it would still likely only apply to new mortgages, not retroactively to existing mortgages.
 
You must log in or register to reply here.
Back
Top