Summary
The Trump administration is considering introducing a 50-year mortgage to make home buying more affordable. This type of loan would have higher interest rates than traditional 30-year mortgages and would result in borrowers paying off their debt more slowly. The monthly savings might not significantly differ from traditional mortgages.
Key Facts
- President Trump is working on introducing a 50-year mortgage.
- A 50-year mortgage would come with a higher interest rate, estimated at 6.94%.
- Monthly payments on a 50-year mortgage would be slightly lower than a 30-year one, by about $83, for a $500,000 loan.
- In the first decades, payments would mainly cover interest, reducing debt very slowly.
- After 5 years, a 30-year mortgage holder would have paid off more debt than a 50-year one.
- The 50-year mortgage would result in less equity built over time compared to shorter-term loans.
- It resembles interest-only loans, which carry risks similar to those seen in the 2007-2008 financial crisis.
- Borrowers would pay down debts much slower than with traditional loans, saving little monthly.
