Weβre in a real housing cost-of-living crisis. Food, rent, and home prices are brutal. Young adults are locked out of homeownership. So I actually like that this administration is at least trying new ideas β including the talk of a 50-year mortgage. Doing nothing isnβt working.
But hereβs my concern: on paper, a 50-year loan looks great. Lower monthly payment, easier to βqualify.β In real life, in a world where people finance pizza (Holy new hell, it's a thing!) and only look at βCan I swing things this month?β, it can turn into a long-term debt trap. It is the same psychology car dealers use when they flash a low monthly payment instead of telling you what the car really costs or how many payments. (Pet peeve, Toyota)
The focus stays on todayβs payment, not the total cost or how long youβre locked in. The real goal should be to own your home. Stretch that term to 50 years and youβre paying mostly interest for a long time before you even dent the principal.
Iβm not anti-mortgage. Back when you could refi with no closing costs, (remember that?!) I restarted 30-year loans more than once for large projects such as a roof, HVAC, renovation and an addition. I chose 30-years to keep the REQUIRED payment low so if I got sick or lost income, I wouldnβt lose my house.
The difference? I had a clear plan: prepay the principal aggressively and enter retirement with no mortgage. My required payment was around $900; I actually pre-paid an additional $2,000β$2,500 a month and killed the mortgage well before my 60s.
So my take: experimenting with solutions is good. But a 50-year mortgage in a society that doesnβt teach basic money skills? It might help a small, disciplined minority β and quietly trap a lot of others in 50 years of payments.