Trump proposes 50-Year Mortgage

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ZZLPHeels said:
It might help soften the real estate market by making it more palatable for people to sell their homes and buy new/different ones. More supply = lower prices for everyone, including first time home buyers.
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Currently single folks get a 250k capital gain exclusion and married folks get a 500k exclusion so ending a capital gains tax doesn't really help and for most folks selling homes it doesn't really help.

The exception would be for sellers whose homes have appreciated by more than 250k or 500k so more of those sellers could be motivated to sell and increase the supply for high end homes, but again I don't really see how that increase in supply benefits most first home buyers.

That said, eliminating the capital gains tax on my house which is on the market would save me and the missus around 60k in capital gains tax. Yay !

The problem for me is that the uncertain economy created by Trump has potential buyers worried about job security and not seeing a significant decrease in mortgage rates.

Thanks Biden :mad:
 
BlooVooDoo said:
People selling one house to buy a different one doesn’t really help supply. We need new construction that isn’t in the upper quartile of the market. The new homes being built near my neighborhood are mostly 4-5br, 4ba homes of more than 3,500sf with premium appliances and finishes. Definitely not something that many first time buyers can access.
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Agree. All new housing around me is big and expensive. No one wants to build starter homes that are affordable.
 
On top of all the other reasons this is a terrible idea, there’s the simple mf’ing absolute law of mf’ing supply and mf’ing demand.

Any minor reduction in monthly mortgage payments on starter homes will be absolutely and perfectly negated by the increased purchase price from increased demand, the supply of starter homes being relatively inelastic.
 
Wheels81 said:
With a fifty year mortgage , you’d never build up any equity. Plus you’d have all the hassles of home ownership. You might do better simply renting.
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This is simply not true. The vast majority of equity comes from price appreciation, not principal pay down. If you live in a house for 10 years and sell, the majority of equity will be from appreciation.

Also, very few people live in a house for 30 years without selling or refinancing. Same would go for a 50 year mortgage. People could refinance from a 50 to a 30 or even a 15 when interest rates lower or their financial condition improves.

A 50 year mortgage is essentially equivalent to an interest only mortgage. It is not a bad idea - although it should be regulated to avoid onerous terms (eg, penalties for refinancing, etc)
 
ChileG said:
And the 50-year mortgage will have a higher interest rate than the 30-year.
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Putting the dumb and unrealistic idea of a 50-year (!) mortgage aside, it should be obvious to anyone looking at the median US home price and average monthly mortgage payment for a 30-year mortgage at why so many Americans are frustrated and angry with the economy in general, and why the homeless rate is increasing. The number of Americans (especially younger ones) who can afford to pay that much a month for a home is fairly limited, imo. And it goes without saying that it affects the number of younger people willing to have kids and pay for childcare/daycare costs along with the mortgage and paying for groceries that are steadily increasing in price and eventually trying to pay for college - all while paying $2,800 a month for the average home. And the job market is weaker right now than I think many people realize.

A good many things about our economy are broken, imo, and this accounts at least in part for the constant anger that just seems to be seething through the country. There's a lot of very frustrated people out there right now. Something I've noticed over the past decade or so is the number of younger adults and couples who are basically getting homes by being given a grandparent's or parent's home - not an ideal solution and the sign of an economy that is leaving many younger adults and couples behind.
 
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heelslegup said:
I smell private equity firms pushing this idea
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PE has infiltrated every other aspect of home ownership. I learned a few months ago of how many HVAC/electrical/plumbing and even landscaping contractors in my area are owned by PE. I had been wondering how all these “local” companies afforded fleets of 20-30 fully equipped utility vans with custom vinyl wraps.
 
Calheel said:
This is simply not true. The vast majority of equity comes from price appreciation, not principal pay down. If you live in a house for 10 years and sell, the majority of equity will be from appreciation.

Also, very few people live in a house for 30 years without selling or refinancing. Same would go for a 50 year mortgage. People could refinance from a 50 to a 30 or even a 15 when interest rates lower or their financial condition improves.

A 50 year mortgage is essentially equivalent to an interest only mortgage. It is not a bad idea - although it should be regulated to avoid onerous terms (eg, penalties for refinancing, etc)
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That is true. I think the average is 7 years before selling or refinancing. So if a 100 year mortgage would lower mortgage payments even more than a 50 year mortgage, wouldn't a 100 year mortgage be more attractive for the 7 years before selling or refinancing ?
 
heelinhell said:
That is true. I think the average is 7 years before selling or refinancing. So if a 100 year mortgage would lower mortgage payments even more than a 50 year mortgage, wouldn't a 100 year mortgage be more attractive for the 7 years before selling or refinancing ?
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There is virtually no difference between a 100 and 50 year mortgage. And in all honesty - despite the gnashing of teeth on this thread - there is very little difference between a 30 year mortgage and a 50 year mortgage.

And a big laugh to anyone who thinks a 50 year mortgage is Trump’s idea. Trump hasn’t had his own idea ever. The 50 year mortgage has been debated for many years. The idea is not new.
 
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