Conspiracy theorys, where do you stand?

[Brian662]

I think the idea sucks but I think you missed something here. Loaning someone money at 6% for 30 years stuffs a lenders pockets way more than lending it to them at 6% for 50 years.

How do you figure that? It'll be 35 years before any significant principal starts being paid. The average homeowner wouldn't even stay in the mortgage long enough to pay ANY principal. Zero equity for their money, all to the lender.

 

[Brian662]

An extra $100k in interest for the additional 20 years on a $100k loan.

 

[Brian662]

If this is geared toward first time homeowners and younger folks, the FSA has had beginning farmer and rancher loans that will extend out to 40 years for a long time. Both appreciating assets.


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Ownership of farms is more often generational, not so much with homes.

 

[Bill]

Ok I see the point. But it’s not going to line their pockets any faster. And if they have to wait an extra 20 years to be paid back shouldn’t they make more?

I’m sure a 30 year mortgage will still be available. My last farm mortgage was 15 years by choice.

 

[Brian662]

My point is that this potential 50 year mortgage didn't do anything to make things better for anyone.

Work on cutting the red tape that burdens builders, lowering rates and supply costs. Those seem way more helpful to a struggling housing market.

Offering a lifetime loan that provides zero equity doesn't help, folks may as well keep renting. At the end of the day you'll have the same to show for it with way less risk.

 

[jsasker007]

Interest is a killer.

 

[Westwind]

Offering a lifetime loan that provides zero equity doesn't help, folks may as well keep renting

100%.

 

[Jerry-B-WI]

My point is that this potential 50 year mortgage didn't do anything to make things better for anyone.

Work on cutting the red tape that burdens builders, lowering rates and supply costs. Those seem way more helpful to a struggling housing market.

Offering a lifetime loan that provides zero equity doesn't help, folks may as well keep renting. At the end of the day you'll have the same to show for it with way less risk.

That 50 year loan is a boon for the banks.
People that don't understand compound interest will be owned by it and be it's slave for the duration of their lives.
Why not write mortgages like a auto loan where the principle is paid down every week instead of every month or biweekly? The greedy bank will still make some money and the buyer gets to build equity quicker.

 

[Jerry-B-WI]

You don’t think lowering mortgage rates would be rocket fuel for the pent up demand due to high monthly payments?

I think the rocket fuel you're looking for would be to eliminate the tariffs on all products that go into building homes. That lowers your cost and you could pass it on to your customers.

I also think Americans need to rethink just how big of a shack they need to live in. I know plenty of people who want a 3000 sqft house, but the question is do you need 3000 sqft and can you honestly afford it? How big of a house did you grow up in? Were you comfortable and did you have everything yo needed?

 

[Jerry-B-WI]

Ok I see the point. But it’s not going to line their pockets any faster. And if they have to wait an extra 20 years to be paid back shouldn’t they make more?

I’m sure a 30 year mortgage will still be available. My last farm mortgage was 15 years by choice.

Can I ask why yo made the choice of a 15 year mortgage?

 

[Bill]

Can I ask why yo made the choice of a 15 year mortgage?

3% vs 4%.

 

[Jerry-B-WI]

3% vs 4%.

So you gotta ask yourself, why does the shorter term mortgage have a lower interest rate?

I think you picked the 15 yr because you knew it would be paid off sooner at a lower rate which saved you money two ways. And you could truly afford it.

 

[Bill]

So you gotta ask yourself, why does the shorter term mortgage have a lower interest rate?

I think you picked the 15 yr because you knew it would be paid off sooner at a lower rate which saved you money two ways. And you could truly afford it.

That all plays into it.

 

[Howboutthemdawgs]

I think the rocket fuel you're looking for would be to eliminate the tariffs on all products that go into building homes. That lowers your cost and you could pass it on to your customers.

I also think Americans need to rethink just how big of a shack they need to live in. I know plenty of people who want a 3000 sqft house, but the question is do you need 3000 sqft and can you honestly afford it? How big of a house did you grow up in? Were you comfortable and did you have everything yo needed?

Pre tariff the housing market still sucked. It was all about rates. Rates were too high largely cause of government debt…the same debt we will use to give the farmers a bailout.
Also you said YOU THINK people need to rethink…
That’s your opinion with all due respect. People have different wants and needs. Once again everyone wants to all the sudden be financial life planner but not when the farmer is getting a bailout. Should we tell the farmer he can only drive an xl f250 and not the lariat?
I have nothing against the farmer, it’s funny the hypocrisy between industries though.

 

[Wind Gypsy]

My point is that this potential 50 year mortgage didn't do anything to make things better for anyone.

Work on cutting the red tape that burdens builders, lowering rates and supply costs. Those seem way more helpful to a struggling housing market.

Offering a lifetime loan that provides zero equity doesn't help, folks may as well keep renting. At the end of the day you'll have the same to show for it with way less risk.

They'd get equity from appreciation in theory, as long as maint costs dont offset all of it.

As your payment calculator showed, it doesn't even really move the needle much on what the payment is. If you cant afford it on a 30 year, you probably still cant afford it on a 50 year. This is stupid.

 

[Brian662]

They'd get equity from appreciation in theory, as long as maint costs dont offset all of it.

As your payment calculator showed, it doesn't even really move the needle much on what the payment is. If you cant afford it on a 30 year, you probably still cant afford it on a 50 year. This is stupid.

Ok, fair.

Rent an apartment, take money saved on maintenance costs, invest it. You'll likely have more money than the appreciation without all the risk.

 

[Foggy47]

^ Good discussion....HOWEVER......IF (and that is a capital IF) inflation persists the way it has during my life....then that home you paid $100,000 for ....may be worth FAR more than the price you paid. Like 10x the price. Therefore, finding a way to gain equity ownership may trump the interest you pay. Plausible.....and many people bank on that reality.

Thus....that home may never meet your payment expectations. As I have said to my grandids.....you can bank on inflation. Plan for it.

I'm reminded of a saying from a book I once read: "Buy quality things of lasting value". Seems to me real estate qualities for that....and new pickup trucks do not.

 

[Wind Gypsy]

^ Good discussion....HOWEVER......IF (and that is a capital IF) inflation persists the way it has during my life....then that home you paid $100,000 for ....may be worth FAR more than the price you paid. Like 10x the price. Therefore, finding a way to gain equity ownership may trump the interest you pay. Plausible.....and many people bank on that reality.

Thus....that home may never meet your payment expectations. As I have said to my grandids.....you can bank on inflation. Plan for it.

I'm reminded of a saying from a book I once read: "Buy quality things of lasting value". Seems to me real estate qualities for that....and new pickup trucks do not.

 

[somich]

Ok, fair.

Rent an apartment, take money saved on maintenance costs, invest it. You'll likely have more money than the appreciation without all the risk.

Your post actually means Rip the crap out of someone else's property and after it's destroyed fun out with unpaid utilities, no assets and dump the wreckage on the owner you just screwed over. Seen it over and over working on rentals that "were" very nice, before the renter. The renters just laugh in court, Get it , they say.

 

[Catscratch]

The bank makes money now in an increased amount of loans. If 50yr notes increases the amount of buyers then the banks increase their number of monthly payments. Most of those will eventually be refinanced when owners move up the pay scale, or when the house sales. Processing fees and charges go to the bank too. If not, then they collect interest for 50 freakin yrs.

My oldest kid saved his money to buy his first phone with cash. He was 14. Went to Walmart and picked one out that he could afford. Went to pay for it and they informed him that they only do payments. I said scam, what's your interest rate? Kid behind the counter said zero interest. We walked away and talked about it. Went back to the counter to say no thanks. The kid said "that phone is only $22 a month, I can get you this better one for $26/month. That's a lot more phone for only a couple of dollars". Then it hit my boy... For $4 a month they could sell a $1200 phone instead of the $800 phone if hidden in monthly payments. Didn't need interest.

My boy's an accountant now.