Math checks out, but you don't know financing.
The notion that lenders would offer a 50-year mortgage at the same interest rate as a 30-year is laughable. Accounting for that, your math starts to fall apart.
Your rate of return also doesn't account for inflation.
You also don't account for the very high likelihood that home values will collapse in the near (< 20 years) future.
“YoU dON’t knOw maTH”
Here’s the math then:
$400,000 Mortgage Comparison @ 6%
30-Year Mortgage
- Monthly Payment: $2,398
- Total Loan Cost: $863,352
50-Year Mortgage
- Monthly Payment: $2,106
- Total Loan Cost: $1,263,372
Total monthly savings: $292
$292/month for 50 years is equivalent to $4.3mil if invested in the S&P500 AND taking into account inflation.
The bank is giving you a $3.9mil discount on the money and that’s not even taking into account increase rent cost and real estate appreciation over 50 years.
“But people won’t use the money to invest”
The argument remains valid. The value of monthly savings is much greater than the additional interest you pay the bank.
Who wins?
You. You’re getting a steal.