50 Year Mortgage

[alebrewer]

I recall Peter Lynch talking about how we are taxed on our savings, but get tax breaks for our debt, then wonder why there is a savings problem in this country.

Exactly... what sane govt taxes income and not spending? Here's an idea: let's discourage folks from working and encourage unbridled spending. Brilliant.

 

[Non Sequitur]

7 year loan on a car. 50 year mortgage is for the same client as a 7 year car loan.

True. And some offer an 8 year car loan, that's the only way most can afford a $70-80k vehicle with TT&L, warranty, etc. I was chatting with a new home sales rep the other day, most of her inventory is in the $300k range. She said her biggest hurdle is buyers not qualifying because of $1,000+ car loan payments. Crazy world we live in right now.

 

[ucbruin]

Our parents said the same thing when we were in our 20s and 30s....

 

[Overimprovement]

I recall Peter Lynch talking about how we are taxed on our savings, but get tax breaks for our debt, then wonder why there is a savings problem in this country.

I read an article over the weekend and a "personal finance expert" had four recommendations - three were to take out a loan.

For businesses, this is usually great advice, as the cost of debt financing is usually far less than the true cost of equity financing. Most businesses I underwrite have leverage ratios in the 3-5 range, and that is fine. But to get to where a business is bankable, the balance sheet and income statement must be decent, and that is hard for startups unless the owners have the cash to seed the business.

For people, debt is a large negative, but for the past 50 years has been so readily available that it is part of the culture now. I remember getting credit card pre-approvals in college, earning basically $0 and living off scholarships and financial aid.

 

[shrubberyvaluation]

Whatever they do to make housing affordable, or giving tax incentive, it only raises the values. Within a short period, any savings is lost. And oh do the authorities who tax real estate, love the golden goose laying those eggs.
Pretty soon we will all be living in the company town.
Welcome to town usa. Walmart will be the company store. CU will be the chief appraiser and staff.

Yep spreading out the loan means they can afford to pay more, jacks housing prices.

 

[George Hatch]

IMO - effective demand operates at that combination of (income+ price + terms). Not just at (income + price).

People buy the payment, not the price. 3% mortgages enabled everyone to pay higher prices so that's where the pricing went - straight into the pockets of the sellers. 10% mortgages would result in more people being unable to pay the prices that went with 3% mortgages and would likely reduce the prevailing prices. At the expense of the sellers.

Same thing with lowering payments by extending the length of the loan term. All that does is enable more people to compete for the same house at the higher price. Same thing with raising the minimum wage and giving out free UBI. All that does is enable the competition - primarily for housing - to occur at the higher prices. It doesn't actually benefit the have-nots by increasing their discretionary income.

The Haves get more, by the hand of govt.

 

[djd09]

Adjustable rate mortgages are making a major comeback. Is an ARM right for you?​

We asked 7 mortgage and finance experts to weigh in on the pros and cons of ARMs​

The love-it-or-loathe-it adjustable rate mortgage (ARM) is seeing an uptick in activity as the Mortgage Bankers Association reveals 10% of purchase-mortgage applications for the week ending October 3, 2025 were for ARMs, which is the highest it’s been since 2023.

https://www.marketwatch.com/picks/adjustable-rate-mortgages-are-making-a-major-comeback-with-average-rates-at-5-46-is-an-arm-right-for-you-8dfa8b00?gaa_at=eafs&gaa_n=AWEtsqfl36D72sKn75ytcDxlA8DCcVNJtM0oxz1_0L0X85-HYXe-vrN5Mq7K&gaa_ts=691222c2&gaa_sig=ZONZQjDeiw7AF6-9Tcfjy6fMVw3O4CXVI1N3HFzR8anBmhZVphrNVkJWNC_kQQV6wPRUeVvgWaA9PeEomgMaHg%3D%3D

 

[Fernando]

Why stop at 50 years? Why not 40 year loan. More options, better.
Problem is buying a $5 million bigger home will have property tax at about $60,000, increase in maintenance, insurance & utilities.
I hate to pay more taxes to the government.
If I could deduct those home costs, that would be good.

 

[KHS445]

Has anyone thought about who is selling these high price houses? In many cases it is the parents and grandparents of the young adults who can’t afford to buy a house. Maybe the older generations should discount their homes to help the members of their kids and grandkids generations purchase a home.

Along with rent control, maybe the Government should limit the amount of growth/profit a homeowner can realize to say a maximum of a 5% annual return, could even back date the limited annual return to pre-COVID level hosing prices. Think it will happen? Neither do I.

I can’t wait for the first politician who offers to sell their property based on a Government imposed return investment limit. As stated by others, many Government units are thriving due to the significant increase in property tax revenue.

 

[Charles West]

Monetary inflation strikes again, the gift that keeps on giving.