The Math Behind The 50 Year Mortgage
Analyzing the Financial Math of the 50-Year Mortgage Proposal
Analyze the mathematical trade-offs of a 50-year mortgage to determine if it truly solves housing affordability or merely defers cost. Discover whether the time value of money can make extended debt advantageous for savvy investors.
Short Summary
- Stretching mortgages significantly lowers monthly payments, calculated as roughly a 10% monthly saving on a $400k home valuation.
- Long-term debt drastically increases total interest paid—potentially costing nearly twice as much interest as a 30-year loan.
- Market mechanics suggest home prices inflate in response to cheaper borrowing, effectively negating the initial affordability gain.
- Savvy investors might financially benefit by systematically investing the monthly difference, but human inconsistency undermines this strategy.
- True and sustainable affordability requires addressing housing supply issues rather than adjusting loan structures.
This summary breaks down the financial calculation behind extending mortgages to 50 years, contrasting immediate payment relief against massive long-term interest burdens. The analysis considers historical context, market response (inflation), and the sophisticated arbitrage strategy centered on the time value of money versus behavioral realities.
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Top Comments (10)
Hell, the way houses/townhouses are built so cheaply these days they won't even last 50 years 😂
We went from talking about generational wealth to generational debt
You'll own nothing and be happy. All part of the plan
10% less in payments for 20 extra years. What a crappy deal.
50-year loan with no credit score? That’s not buying a house, that’s joining a subscription service.
Instead of making home affordable, here we have government asking people to be slaves to financial greedy corporates …
Thank god I paid off my mortgage and other debt obligations 3 months ago. I'm now completely debt free! It's a great feeling!😁
I don’t understand how houses these days are built basically out of cardboard but they’re charging 20x the price that it used to be. Greed is our issue and idk how we can even fix that.
Real estate broker here. People generally buy a home based on the payment, not the total purchase price. Dropping the payment by stretching the loan term to 50 years would temporarily drop payments, but buyers would eventually bid prices up to payment levels that are comparable to current rates. This would make home prices go even higher over the mid to long term. You have a similar result when you drop interest rates or the cost of other monthly obligations (like property taxes).
With a 50 year mortgage, you might as well be renting. hehe
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Top Comments (10)
Hell, the way houses/townhouses are built so cheaply these days they won't even last 50 years 😂
We went from talking about generational wealth to generational debt
You'll own nothing and be happy. All part of the plan
10% less in payments for 20 extra years. What a crappy deal.
50-year loan with no credit score? That’s not buying a house, that’s joining a subscription service.
Instead of making home affordable, here we have government asking people to be slaves to financial greedy corporates …
Thank god I paid off my mortgage and other debt obligations 3 months ago. I'm now completely debt free! It's a great feeling!😁
I don’t understand how houses these days are built basically out of cardboard but they’re charging 20x the price that it used to be. Greed is our issue and idk how we can even fix that.
Real estate broker here. People generally buy a home based on the payment, not the total purchase price. Dropping the payment by stretching the loan term to 50 years would temporarily drop payments, but buyers would eventually bid prices up to payment levels that are comparable to current rates. This would make home prices go even higher over the mid to long term. You have a similar result when you drop interest rates or the cost of other monthly obligations (like property taxes).
With a 50 year mortgage, you might as well be renting. hehe