Trump's 50-year mortgage gets default warning from Moody's chief economist
Mark Zandi told Newsweek the plan could raise house prices and worsen the affordability issue it is intended to solve.
borrowers taking on a five-decade loan would struggle to build equity—with most payments in the first decade being on interest rather than principal. With limited equity, homeowners would have less of a financial cushion should a shock occur—a drop in house prices or unexpected expense—and therefore be at "greater risk of default on these loans." Given this heightened risk, Zandi said interest rates would be "significantly higher" than on standard 30-year mortgages, eliminating many of the cost savings that would result from the longer repayment period.
The cost difference is insane.
For a $500k loan at 6% you're looking at $580k in interest over 30 years or about $1.1M total.
For the same house over 50 years at even 1% higher APR, you're looking at $1.3M in interest alone or $1.8M total.
You'd pay more in interest alone than you would for the entire principle + interest of a conventional 30 year mortgage and the difference in monthly payment between the two (not that this should really ever be part of the equation) is only $10, so where the fuck is the "savings?"
Let's also not forget that the biggest obstacle for first time homebuyers is not the monthly payments (which are typically similar to or even lower than their current rent rates, but with the added benefit of building equity) but to saving for the down payment while paying that rent. A 50 year mortgage only serves to prop up already inflated home prices, not to decrease them, meaning it does nothing at all to help someone actually become a home owner in the first place.
It's all about rich vs. poor.
You and everyone you know is poor.
Yep, a millionaire is 1/1000th of a billionaire. They are much closer to being flat broke than being a billionaire.
The snazzier way of saying this is "the difference between a million dollars and a billion dollars is about a billion dollars."
That sounds like something a radical left antifa terrorist would say.