50 Year Mortgage Should only be offered to Investors

Lender · Saddle Brook, NJ · Member since 2023 · 431 posts · 231 votes

10mo

I've been getting this question a lot and have been telling people almost verbatim what you have laid out in this post. There's going to be a place for it, but to say it is going to solve many issues in the industry or it will be better than the 30 yr term options, I do not think that is the case.

Also, for a regular home buyer going based off DTI, in order to qualify for a mortgage payment of $150 more a month, you only need to make $3600/yr. That is a very feasible number for many FTHBs. I don't believe this new 50yr is going to make much of any difference for many people.

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Alan AsriantsBusiness Member
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Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
10mo
Quote from @Ryan Muska:

I've been getting this question a lot and have been telling people almost verbatim what you have laid out in this post. There's going to be a place for it, but to say it is going to solve many issues in the industry or it will be better than the 30 yr term options, I do not think that is the case.
Also, for a regular home buyer going based off DTI, in order to qualify for a mortgage payment of $150 more a month, you only need to make $3600/yr. That is a very feasible number for many FTHBs. I don't believe this new 50yr is going to make much of any difference for many people.

Agreed, its really not worth it. Maybe some will use it but I don't think it will be a popular produt nor will it shift or improve the market.
That being said a portable mortgage might really cause a major shift in the market. Flooded demand and supply can cause a lot of imbalances. Honestly the best thing IMO is to keep rates similar and bring them down gradually to 5-5.5% over the course of next 3 years to not shake the market
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James Mc Ree

Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 936 votes

10mo

I don't think many borrowers are holding their 30 year mortgages to term. Very few will hold 50 year mortgages to term as that is effectively a lifetime. Investors are fully depreciated at 27 years.

It may be better to rent than own with a 50 year mortgage if low appreciation is expected.

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Alan AsriantsBusiness Member
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Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
10mo
Quote from @James Mc Ree:

I don't think many borrowers are holding their 30 year mortgages to term. Very few will hold 50 year mortgages to term as that is effectively a lifetime. Investors are fully depreciated at 27 years.
It may be better to rent than own with a 50 year mortgage if low appreciation is expected.
I agree most people are definitely not holding their mortgages for 30 year terms however, at the 50 year amortization, there's not much pay down in the beginning. This can hurt a lot of americans and put them under water if they are not putting a lot down.
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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

10mo

It is very similar to an interest only mortgage when it boils down to it. It really depends on the persons situation. If someone is putting 20% down and interest only that is better long term bet than a 30 year loan at 97% financing. What works for you may not work for someone else. For example we have some 15 year loans and people say we were nuts - property nearly paid off and I am not complaining.

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Alan AsriantsBusiness Member
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Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
10mo
Quote from @Chris Seveney:

It is very similar to an interest only mortgage when it boils down to it. It really depends on the persons situation. If someone is putting 20% down and interest only that is better long term bet than a 30 year loan at 97% financing. What works for you may not work for someone else. For example we have some 15 year loans and people say we were nuts - property nearly paid off and I am not complaining.
That's a good point especially since commercial mortgages have been operating this way for a very long time and people still seem to invest in commercial real estate using interest only loans that being said, I still think for the average consumer that is not an investor is not the best option.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
10mo
Quote from @Alan Asriants:

Quote from @Chris Seveney:

It is very similar to an interest only mortgage when it boils down to it. It really depends on the persons situation. If someone is putting 20% down and interest only that is better long term bet than a 30 year loan at 97% financing. What works for you may not work for someone else. For example we have some 15 year loans and people say we were nuts - property nearly paid off and I am not complaining.
That's a good point especially since commercial mortgages have been operating this way for a very long time and people still seem to invest in commercial real estate using interest only loans that being said, I still think for the average consumer that is not an investor is not the best option.

I am not a fan of this option either, but I would not discuont it, it has a time and place for some people and not others. I was more pointing out the hypocrisy many have with these mortgages as they are gurus telling you to never get a 30 year mortgage, but compared to 15 years - it is slightly similar.
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Devin Conley

San Diego · Member since 2024 · 44 posts · 20 votes

10mo

Completely agreed @Alan Asriants - good breakdown

Average holding period is less than 10 years so your math is the practical end state for most buyers

Only ~5% of payments go towards principal in that time... so any meaningful equity comes entirely from price appreciation

At that point, you're just renting a leveraged bet from the bank, including all the exposure to downside risk if prices drop

Quickly turns into (even more of) a speculation game

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Alan AsriantsBusiness Member
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Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
10mo
Quote from @Devin Conley:

Completely agreed @Alan Asriants - good breakdown
Average holding period is less than 10 years so your math is the practical end state for most buyers
Only ~5% of payments go towards principal in that time... so any meaningful equity comes entirely from price appreciation
At that point, you're just renting a leveraged bet from the bank, including all the exposure to downside risk if prices drop
Quickly turns into (even more of) a speculation game

Right - you are honestly operating more like a business with higher default rates than a "smart" investment
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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

10mo

Quote from @Alan Asriants:

After hearing about the proposed 50-year mortgage, I started to think about certain scenarios and who it could actually be beneficial for. I don’t think that a 15-year mortgage could be offered at the same rate as a 30-year mortgage, just like we already see with the difference between a 15- and 30-year loan. And assuming even a half-percent increase for a 50-year term, there is actually a minimal amount of monthly savings a buyer would achieve. I don’t think there is any scenario where a bank would lend out a 50-year loan at a similar rate.

I ran the numbers on a 500k loan—one at 50 years with a 7% rate, and the other at 30 years with a 6.5% rate.

50-Year Mortgage:

Monthly payment: $3,008.44

Principal paid in first 10 years: $15,884.96

Remaining balance after 10 years: $484,115.04

Year when principal exceeds interest in each payment: Year 40.17

Notes: Very slow amortization; almost all payments go to interest for decades.

30-Year Mortgage:

Monthly payment: $3,160.34

Principal paid in first 10 years: $76,119.37

Remaining balance after 10 years: $423,880.63

Year when principal exceeds interest in each payment: Year 19.42

Notes: Much faster payoff compared to the 50-year option.

After 10 years on a 50-year loan, you have only paid off about 3.1% of the loan.

After 10 years on a 30-year loan, you have paid off about 15.2%.

So not only is the savings less than $200 per month—in this case about $150—but there is barely any principal buy-down. For most Americans this is an extremely over-leveraged position.

However, investors typically find themselves in leveraged positions, and $150 per month in additional cash flow could make more sense, especially if the property is treated as an asset that is actually generating income. Extra cash flow can help some get into real estate investing and help others maintain their properties—of course at the cost of minimal equity paydown, which is what truly builds wealth.

That is the difference! Your primary home is not an income-generating asset, and therefore a 50-year loan is not a smart choice for anyone looking to take a solid financial route. In fact, it is very risky and does not build wealth; it only keeps you tied to the payment for much longer. The American dream will be difficult to achieve for those choosing a 50-year loan.

I am often the contrarian and that seems to be the case here.

>So not only is the savings less than $200 per month—in this case about $150—but there is barely any principal buy-down. For most Americans this is an extremely over-leveraged position.

I define over-leverage as high risk on not making the payment. A lower payment by my definition can never be more over-leveraged than a loan with a higher payment.

Virtually all of our RE investments have been in high appreciating San Diego 1) I have never had a loan for as long as 10 years 2) my equity pay down resulted in a very small percentage of equity gain. I recognize not all markets are the same, but if there is any market like San Diego, the equity pay down is nearly irrelevant. This can be used to show high variance between markets and why optimal finance option varies by situation.

Note over the 10 year example $18k was less was paid on the mortgage. This is $18k in borrower’s pocket versus equity trapped in the property. If the same payment to income threshold is used for both loans, the 50 year loan would allow the buyer to purchase a more expensive home than the 30 year loan would permit.

In addition, it is hard to ignore the safety of having a long term fixed rate loan. The longer the term, the safer you are from interest rate increases.

For me personally, every RE loan I have got this century has been a 30 year loan. I actively exert effort to keep leverage up on my properties. For the same reason I currently choose 30 year financing, I am confident I would choose 50 year loan for both my RE investments and my personal home.

It is important to recognize every situation is unique. Having another loan option can only help those in the situation to benefit from that loan option.

Good luck

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

10mo

I take the opposite position I think this should only be offered to owner occ with federally insured loans.. 150 to 200 a month for someone buying their first house is a big deal.

It can be enough to jump over the line and get in a better school system or a nicer home .. I know as I wind down building the last of my 90 homes in Oregon .. my families many times made or broke whether they could buy my home for 700k or needed to step down to a inferior product for 670k..

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Alan AsriantsBusiness Member
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Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
10mo
Quote from @Jay Hinrichs:

I take the opposite position I think this should only be offered to owner occ with federally insured loans.. 150 to 200 a month for someone buying their first house is a big deal.
It can be enough to jump over the line and get in a better school system or a nicer home .. I know as I wind down building the last of my 90 homes in Oregon .. my families many times made or broke whether they could buy my home for 700k or needed to step down to a inferior product for 670k..

If 150/m is making it or breaking it - should they be buying in that price range to begin with?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10mo
Quote from @Alan Asriants:

Quote from @Jay Hinrichs:

I take the opposite position I think this should only be offered to owner occ with federally insured loans.. 150 to 200 a month for someone buying their first house is a big deal.
It can be enough to jump over the line and get in a better school system or a nicer home .. I know as I wind down building the last of my 90 homes in Oregon .. my families many times made or broke whether they could buy my home for 700k or needed to step down to a inferior product for 670k..

If 150/m is making it or breaking it - should they be buying in that price range to begin with?

sure the reality is they dont buy my upgraded home because of a 150 a month and go across the street and buy a stripped down lennar house that they hate in 5 years when its falling apart.

its even more pronounced in lower priced markets were the difference between a 200k home and a 175k can be huge..
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
10mo
Quote from @Alan Asriants:

Quote from @Jay Hinrichs:

I take the opposite position I think this should only be offered to owner occ with federally insured loans.. 150 to 200 a month for someone buying their first house is a big deal.
It can be enough to jump over the line and get in a better school system or a nicer home .. I know as I wind down building the last of my 90 homes in Oregon .. my families many times made or broke whether they could buy my home for 700k or needed to step down to a inferior product for 670k..

If 150/m is making it or breaking it - should they be buying in that price range to begin with?

In addition lenders place limit on what percentage of income can go to the loan. So the lenders have their line and that line caps your P&i. Different loan terms allow you to purchase a more expensive house. Seeing the payment is no higher, you would think this is without higher risk of default.
I would go 50 years every time if the only cost was 0.5% increase at rates that 30 year is near 6% and 50 year would be 6.5%. 20 additional years for 8.3% higher rate. I would choose the 50 year term for the same reasons I currently always choose 30 year. It is because I have a good understanding of 1) the advantages of leverage 2) the safety in longevity of fixed rate financing 3) the advantage of the increased cash flow 4) the effort to maintain leverage at near optimal. I would consider it a no brainer. Note if 30 year was below 3% and it was still a 0.5% higher rate for 50 years then it is not as easy a decision, but when the 30 year rate was below 3%, the gap between 30 years and25 year terms had reduced so I would expect the same to happen for the rate between 30 year and 50 year.
As an aside, 50 year term may raise RE values. RE investors who already own RE could benefit from a boost in values. It could make some of us a significant amount of money. My favorite money is money made without any effort. note I am fine if the 50 year never happens or does not raise RE values (hard to see a scenario on how that can happen).
Best wishes
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James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

10mo

I have empathy for where your coming from @Alan Asriants, although I really dislike the over exaggeration of it.

Do the amortization schedule and look at what the equity accrual is on each for the first 7yrs, there is very minimal difference.

Your inferring that with a 30yr mortgage there is some sizable application to principle in early years, there is not.

If a person needs to sell in the first 7yrs, there in trouble without appreciation. With either term.

Your also completely removing a MAJOR economic factor of the future value of the dollar, or dollar depreciation rate.

The median price of a home in 1975 was about $39k. Median price 2025, about $412k.

Money borrowed in 1975 is NOT "worth" the same in 2025, not by a loooong shot. Going off median home prices, it's about a 10X dollar devaluation. Or 1,000%

So would I accept money, with a 50yr term, where at end I only have to pay back as much as 3X? Give me ALL THE MONEY, how much can I get! A billion, can I get a billion!

Our Fed states a pie in the sky "perfect" inflation rate of 2% per year, that's the goal post of "perfect". So those running our money themselves assure with 100% certainty YES the dollar will without doubt incure devaluation over a 10, 30, 50yr term.

If the dollar devalues at just 2% per year, $100 has a value of $36.42 after 50 years.

At just the most minimal adjustment too 2.% for devaluation (aka inflation) it's now $28.21

And at 3.75%, the actual average inflation rate over last 50 years.... It's $14.67

The ACTUAL truth of a 50yr term mortgage with a rate lock is it makes borrowers MORE. Because it's not only saving them $ on their monthly right off the bat, it's now giving them more power to make $ on the borrowed $ itself. They get to essentially receive $100 today, and only have to pay back $14.67.

Now, what they are paying starts at paying a full $100 back, but as time ticks by, it slides down that dollar devaluation slide ever more.

All arguments against a 50yr term speaking of the "risks" if a borrower defulats or needs to sell in yr 1-7, are total and utter nonsense. There is all but 0 difference between a 30 and a 50 in those first years.

After those years, appreciation not equity accrual is the most critical factor to walking with $ in hand from a sale.

To be clear I am not "pro" 50, 30, 15 or really any term, I am Pro MATH. I simply follow the math wherever it takes me.

Now that points out the fundamental flaw, the MBS side requires some arbitrage factor for it to work. Something else, something more than we currently have in the system, which doesn't currently exist. So it's just a political marketing piece until something real is created in MBS side.

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Alan AsriantsBusiness Member
OP
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
10mo
Quote from @James Hamling:

I have empathy for where your coming from @Alan Asriants, although I really dislike the over exaggeration of it.
Do the amortization schedule and look at what the equity accrual is on each for the first 7yrs, there is very minimal difference.
Your inferring that with a 30yr mortgage there is some sizable application to principle in early years, there is not.
If a person needs to sell in the first 7yrs, there in trouble without appreciation. With either term.
Your also completely removing a MAJOR economic factor of the future value of the dollar, or dollar depreciation rate.
The median price of a home in 1975 was about $39k. Median price 2025, about $412k.
Money borrowed in 1975 is NOT "worth" the same in 2025, not by a loooong shot. Going off median home prices, it's about a 10X dollar devaluation. Or 1,000%
So would I accept money, with a 50yr term, where at end I only have to pay back as much as 3X? Give me ALL THE MONEY, how much can I get! A billion, can I get a billion!
Our Fed states a pie in the sky "perfect" inflation rate of 2% per year, that's the goal post of "perfect". So those running our money themselves assure with 100% certainty YES the dollar will without doubt incure devaluation over a 10, 30, 50yr term.
If the dollar devalues at just 2% per year, $100 has a value of $36.42 after 50 years.
At just the most minimal adjustment too 2.% for devaluation (aka inflation) it's now $28.21
And at 3.75%, the actual average inflation rate over last 50 years.... It's $14.67
The ACTUAL truth of a 50yr term mortgage with a rate lock is it makes borrowers MORE. Because it's not only saving them $ on their monthly right off the bat, it's now giving them more power to make $ on the borrowed $ itself. They get to essentially receive $100 today, and only have to pay back $14.67.
Now, what they are paying starts at paying a full $100 back, but as time ticks by, it slides down that dollar devaluation slide ever more.
All arguments against a 50yr term speaking of the "risks" if a borrower defulats or needs to sell in yr 1-7, are total and utter nonsense. There is all but 0 difference between a 30 and a 50 in those first years.
After those years, appreciation not equity accrual is the most critical factor to walking with $ in hand from a sale.
To be clear I am not "pro" 50, 30, 15 or really any term, I am Pro MATH. I simply follow the math wherever it takes me.
Now that points out the fundamental flaw, the MBS side requires some arbitrage factor for it to work. Something else, something more than we currently have in the system, which doesn't currently exist. So it's just a political marketing piece until something real is created in MBS side.

You bring up really good points but I think you're underestimating how much principal you're actually paying off any given time with a 30 year compared to a 50 year term. You can't assume that the interest rate will be the same and you have to use something similar to the difference between a 15 year and a 30 year term to give you a more accurate understanding of what the interest rates can be with a 50 year term.
Assuming a $500,000 loan one is a 30 year term and the other is a 50 year term with about half a point difference in the rate after seven years with a 30 year term, you would've paid off 5X the amount compared to the 50 year term.
After 15 years thats about 140k with a 30 year term and only 30k with a 50 year term. Thats a major difference for $200/m.
My point is not to look at it from an investment perspective, but most Americans wealth is tied to their real estate, and if you offer a solution or a product that prolongs that wealth building, you essentially keep people poorer longer. This can have dramatic affect on the economy, and overall affordability.
How I see it, longer terms will only make it more difficult for people to buy in the future, as prices will be naturally inflated.
I would also assume that people who are putting less than 20% down will probably suffer a higher PMI payment as well. Or might not even have the ability to put lower money down.
I completely understand where you're coming from from an investment perspective and it can make sense to make better returns on your investment property. But for the average person, it is not a financially, smart decision as they are continuously locked into the monthly payment, keeping them poor.
So if you're in Investor or do you think like one and you can use that extra $200 a month and applied somewhere else to make you even more money then by all means go for it but my recommendation for most Americans who are not minded like this is to not opt for longer terms.
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James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
10mo
Quote from @Alan Asriants:

Quote from @James Hamling:

I have empathy for where your coming from @Alan Asriants, although I really dislike the over exaggeration of it.
Do the amortization schedule and look at what the equity accrual is on each for the first 7yrs, there is very minimal difference.
Your inferring that with a 30yr mortgage there is some sizable application to principle in early years, there is not.
If a person needs to sell in the first 7yrs, there in trouble without appreciation. With either term.
Your also completely removing a MAJOR economic factor of the future value of the dollar, or dollar depreciation rate.
The median price of a home in 1975 was about $39k. Median price 2025, about $412k.
Money borrowed in 1975 is NOT "worth" the same in 2025, not by a loooong shot. Going off median home prices, it's about a 10X dollar devaluation. Or 1,000%
So would I accept money, with a 50yr term, where at end I only have to pay back as much as 3X? Give me ALL THE MONEY, how much can I get! A billion, can I get a billion!
Our Fed states a pie in the sky "perfect" inflation rate of 2% per year, that's the goal post of "perfect". So those running our money themselves assure with 100% certainty YES the dollar will without doubt incure devaluation over a 10, 30, 50yr term.
If the dollar devalues at just 2% per year, $100 has a value of $36.42 after 50 years.
At just the most minimal adjustment too 2.% for devaluation (aka inflation) it's now $28.21
And at 3.75%, the actual average inflation rate over last 50 years.... It's $14.67
The ACTUAL truth of a 50yr term mortgage with a rate lock is it makes borrowers MORE. Because it's not only saving them $ on their monthly right off the bat, it's now giving them more power to make $ on the borrowed $ itself. They get to essentially receive $100 today, and only have to pay back $14.67.
Now, what they are paying starts at paying a full $100 back, but as time ticks by, it slides down that dollar devaluation slide ever more.
All arguments against a 50yr term speaking of the "risks" if a borrower defulats or needs to sell in yr 1-7, are total and utter nonsense. There is all but 0 difference between a 30 and a 50 in those first years.
After those years, appreciation not equity accrual is the most critical factor to walking with $ in hand from a sale.
To be clear I am not "pro" 50, 30, 15 or really any term, I am Pro MATH. I simply follow the math wherever it takes me.
Now that points out the fundamental flaw, the MBS side requires some arbitrage factor for it to work. Something else, something more than we currently have in the system, which doesn't currently exist. So it's just a political marketing piece until something real is created in MBS side.

You bring up really good points but I think you're underestimating how much principal you're actually paying off any given time with a 30 year compared to a 50 year term. You can't assume that the interest rate will be the same and you have to use something similar to the difference between a 15 year and a 30 year term to give you a more accurate understanding of what the interest rates can be with a 50 year term.
Assuming a $500,000 loan one is a 30 year term and the other is a 50 year term with about half a point difference in the rate after seven years with a 30 year term, you would've paid off 5X the amount compared to the 50 year term.
After 15 years thats about 140k with a 30 year term and only 30k with a 50 year term. Thats a major difference for $200/m.
My point is not to look at it from an investment perspective, but most Americans wealth is tied to their real estate, and if you offer a solution or a product that prolongs that wealth building, you essentially keep people poorer longer. This can have dramatic affect on the economy, and overall affordability.
How I see it, longer terms will only make it more difficult for people to buy in the future, as prices will be naturally inflated.
I would also assume that people who are putting less than 20% down will probably suffer a higher PMI payment as well. Or might not even have the ability to put lower money down.
I completely understand where you're coming from from an investment perspective and it can make sense to make better returns on your investment property. But for the average person, it is not a financially, smart decision as they are continuously locked into the monthly payment, keeping them poor.
So if you're in Investor or do you think like one and you can use that extra $200 a month and applied somewhere else to make you even more money then by all means go for it but my recommendation for most Americans who are not minded like this is to not opt for longer terms.
"You can't assume that the interest rate will be the same"
I am not. I used assumption of 50bpts. But as I noted at end that wouldn't work for MBS unless some new and enhanced arbitrage aspect, and how that happens, if and when, will dictate rate. It could actually end up being less then a 30.

On average cost to sell rule of thumb is 10%. Instead of throwing around hollow-context numbers such as "at ___ time 30 has accrued 10X equity accrual..." and it's a difference of $1k vs $100 which in either case on a $500k property with $50k in cost to sell, BOTH are a net loss without appreciation.
Use context, and ideally context that matters such as when a person, getting historic appreciation rate of 2.25%, would be able to sell at net $0. THAT is a measure that matters.

"After 15 years thats about 140k with a 30 year term and only 30k with a 50 year term."
Your still missing the point, and math, that the person with the 50 is making $ on the debt because of devaluation.
For example, at this 15yr mark, use the math to figure what that balance is "worth" at the real market USD devaluation rate of 3.75% annually.

Equity is a liar wealth #.
Equity is a fixed non-liquid wealth. Once set, it does not grow, it does not accrue.
Equity is like putting $ in a jar and burying it in the back yard.

But via debt that is suffering 3.75% annual devaluation, that is essentially a profitable return.
And it's on an appreciating asset. Now add in that asset appreciating at 2.75% annually, and your return is 6.5% annually.
Now add in whatever applicable tax advantages.

Now let's keep this focused toward the most important fact, owner occupants, ie vs RENT.
Renting where they get 0 appreciation, 0 equity accrual, really 0 anything other than a roof over the head for 30 days.

Am I for people getting 6.5% vs 0%, yes, yes I am.

To understand me, my mindset, consider I have known, worked and seen behind the curtain. I had my Jerry Maguire moment and my loyalties and passion are with main-street vs wall-street.

The facts speak loud and clear, homeownership is by far and above a significant improvement for people vs life stuck as a renter.

If the options are a 50yr mortgage or more years as a tenant, I am for the fastest path to home ownership.
The leverage does not matter when it's your primary residence.
Rent is a -105% leverage life.
Because you must pay 100% of that rent PLUS the rent increase, generally in 5% range. Hence, renting is -105% leverage. Maybe it's 102.5, 101.75 by exact accuracy of the math but you get the point of why we say renting is -105% leveraged.

Paying ones rent, toward self, toward building something, is always better than building nothing.
A slow crawl is better then a fast rocking chair.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
10mo
Quote from @Alan Asriants:

Quote from @James Hamling:

I have empathy for where your coming from @Alan Asriants, although I really dislike the over exaggeration of it.
Do the amortization schedule and look at what the equity accrual is on each for the first 7yrs, there is very minimal difference.
Your inferring that with a 30yr mortgage there is some sizable application to principle in early years, there is not.
If a person needs to sell in the first 7yrs, there in trouble without appreciation. With either term.
Your also completely removing a MAJOR economic factor of the future value of the dollar, or dollar depreciation rate.
The median price of a home in 1975 was about $39k. Median price 2025, about $412k.
Money borrowed in 1975 is NOT "worth" the same in 2025, not by a loooong shot. Going off median home prices, it's about a 10X dollar devaluation. Or 1,000%
So would I accept money, with a 50yr term, where at end I only have to pay back as much as 3X? Give me ALL THE MONEY, how much can I get! A billion, can I get a billion!
Our Fed states a pie in the sky "perfect" inflation rate of 2% per year, that's the goal post of "perfect". So those running our money themselves assure with 100% certainty YES the dollar will without doubt incure devaluation over a 10, 30, 50yr term.
If the dollar devalues at just 2% per year, $100 has a value of $36.42 after 50 years.
At just the most minimal adjustment too 2.% for devaluation (aka inflation) it's now $28.21
And at 3.75%, the actual average inflation rate over last 50 years.... It's $14.67
The ACTUAL truth of a 50yr term mortgage with a rate lock is it makes borrowers MORE. Because it's not only saving them $ on their monthly right off the bat, it's now giving them more power to make $ on the borrowed $ itself. They get to essentially receive $100 today, and only have to pay back $14.67.
Now, what they are paying starts at paying a full $100 back, but as time ticks by, it slides down that dollar devaluation slide ever more.
All arguments against a 50yr term speaking of the "risks" if a borrower defulats or needs to sell in yr 1-7, are total and utter nonsense. There is all but 0 difference between a 30 and a 50 in those first years.
After those years, appreciation not equity accrual is the most critical factor to walking with $ in hand from a sale.
To be clear I am not "pro" 50, 30, 15 or really any term, I am Pro MATH. I simply follow the math wherever it takes me.
Now that points out the fundamental flaw, the MBS side requires some arbitrage factor for it to work. Something else, something more than we currently have in the system, which doesn't currently exist. So it's just a political marketing piece until something real is created in MBS side.

You bring up really good points but I think you're underestimating how much principal you're actually paying off any given time with a 30 year compared to a 50 year term. You can't assume that the interest rate will be the same and you have to use something similar to the difference between a 15 year and a 30 year term to give you a more accurate understanding of what the interest rates can be with a 50 year term.
Assuming a $500,000 loan one is a 30 year term and the other is a 50 year term with about half a point difference in the rate after seven years with a 30 year term, you would've paid off 5X the amount compared to the 50 year term.
After 15 years thats about 140k with a 30 year term and only 30k with a 50 year term. Thats a major difference for $200/m.
My point is not to look at it from an investment perspective, but most Americans wealth is tied to their real estate, and if you offer a solution or a product that prolongs that wealth building, you essentially keep people poorer longer. This can have dramatic affect on the economy, and overall affordability.
How I see it, longer terms will only make it more difficult for people to buy in the future, as prices will be naturally inflated.
I would also assume that people who are putting less than 20% down will probably suffer a higher PMI payment as well. Or might not even have the ability to put lower money down.
I completely understand where you're coming from from an investment perspective and it can make sense to make better returns on your investment property. But for the average person, it is not a financially, smart decision as they are continuously locked into the monthly payment, keeping them poor.
So if you're in Investor or do you think like one and you can use that extra $200 a month and applied somewhere else to make you even more money then by all means go for it but my recommendation for most Americans who are not minded like this is to not opt for longer terms.

using OP's numbers, loan $500k and 30 year rate as 6.5%, 90% LTV P&i is $3160/month. Rate term to 50 year rate to 7% the sane mortgage allows for a loan of $533k.
Seeing the OO is doing OO we will use 90% LTV $33k at 90% LTV equates to a $36.7k higher priced home
$33.7 more house. If we use an average 4% long term appreciation for 10 years, this equates to $49.9k.
The equity patdown differential is $76.1k - $15.9k =$60.2 K.
Subtract additional appreciation of the more costly home: $60.2k - $49.9k =$10.3 K.
$10.3k/120 months = $86/month. $86/month to live in a house that is worth $33.7k more.
My point is not to state which is superior (it depends on market and individual mindset) but to point out there is another option than buying the same price home. The lower payment can allow the purchaser to buy a more expensive home. This higher price affects the total appreciation which affects to numbers.
My market per neighborhoodscout has averaged almost 6% appreciation for this century. Historically in my market, buying the more costly home at a 0.7% rate increase would have been the better financial choice and as bonus, you get to live in the nicer home. We know historical data does not imply future results but I would choose to take the chance for the same reason that I am still looking to purchase in my market (I certainly do not purchase for the initial cash flow).
My stance the entire thread is it is never bad to have more tools in the toolbox and that there will be some OO purchasers that 50 years is the right choice and others that likely would be better served by other loan options.
Best wishes

1 Reply

Carmen Harris

Member since 2020 · 10 posts · 2 votes

10mo

50-year loans can be a useful tool in certain situations, but it shouldn’t be the primary strategy. The real opportunity for lower monthly payments is new construction. New home builders are providing the best incentives at the moment. If financing, investors and non-investors should run the numbers to compare monthly payments.

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James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

10mo

If we are being bluntly honest with selves; to decry a 50yr term vs 30yr term is pure prejudice.

It is no different then standing a soap box and wagging the finger at people for getting a 30yr term vs 15yr term.

Who are we to dictate what length of term is "acceptable"? It's purely an opinion to state what a term length should or should not be.

Who are we to say a burger can only have 2 pieces of bacon on it, that 4 is "excessive and harmful"?

Who are we to state where that line is that's "ok"?

That's NOT Freedom and Liberty. That's control and dictating others must act as one feels they "should" be acting and doing.

There is literally nothing "predatory" about a length of term. The length of a loan term is a CHOICE of the person selling the $ and the person buying the $. It's not like it's a confusing thing that many will struggle to understand the difference of what 30 years vs 50 years vs 100 years is. Everyone knows what a year is, and that 50 is 20 years longer than 30.

And we have disclosures for mortgages spelling it out VERY clearly what the interest is and what not. Nothing is hidden at all.

So, it's merely an argument stating of what CHOICES persons should be allowed or denied.

I am PROUDLY Libertarian on this front; people should have any dange choice they desire as long as it's done freely, knowingly, willingly and wantingly, and not at cost of harm to others.

You wanna ride a motorcycle without a helmet? Hey, your an idiot, but you go for it buddy, your freedom!

Oh, you wanna eat a burger a day with 1 pound of bacon on it? Fast track to a coronary but you-do-you friend!

We have no right to dictate to people how they live within adhering to the foundational framework of our nation; Life, Liberty and the pursuit of happiness.

It's really just that simple.

If you wanna talk about what home buyers do that's dumb...... well we can write a whole book series on moronic spending habits and actions. Buy/build in a flood plane and not insure. Own/build in a fire prone CA area and NOT have insurance. Buy a flip using HML and leveraging to the gills on hopeium your gonna figure out how to reno before the pennies in the pockets run out.

Oh, I can go on and on with no shortage of much MUCH dumber and harmful things people freely are allowed to do in real estate DAILY vs a term of 20yrs longer.

It's arguing the dangers of a kid playing with the "Roman Candle" of a 50yr term while other kids are lobbing grenades around.

How about the genius of using credit cards to do investing? Your talking about a 50yr and it's what, maybe 7, 7.5% interest rate. How about 22%, 28%, 30%+!!!!

1 Reply

Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
10mo
Quote from @James Hamling:

If we are being bluntly honest with selves; to decry a 50yr term vs 30yr term is pure prejudice.
It is no different then standing a soap box and wagging the finger at people for getting a 30yr term vs 15yr term.
Who are we to dictate what length of term is "acceptable"? It's purely an opinion to state what a term length should or should not be.
Who are we to say a burger can only have 2 pieces of bacon on it, that 4 is "excessive and harmful"?
Who are we to state where that line is that's "ok"?
That's NOT Freedom and Liberty. That's control and dictating others must act as one feels they "should" be acting and doing.
There is literally nothing "predatory" about a length of term. The length of a loan term is a CHOICE of the person selling the $ and the person buying the $. It's not like it's a confusing thing that many will struggle to understand the difference of what 30 years vs 50 years vs 100 years is. Everyone knows what a year is, and that 50 is 20 years longer than 30.
And we have disclosures for mortgages spelling it out VERY clearly what the interest is and what not. Nothing is hidden at all.
So, it's merely an argument stating of what CHOICES persons should be allowed or denied.
I am PROUDLY Libertarian on this front; people should have any dange choice they desire as long as it's done freely, knowingly, willingly and wantingly, and not at cost of harm to others.
You wanna ride a motorcycle without a helmet? Hey, your an idiot, but you go for it buddy, your freedom!
Oh, you wanna eat a burger a day with 1 pound of bacon on it? Fast track to a coronary but you-do-you friend!
We have no right to dictate to people how they live within adhering to the foundational framework of our nation; Life, Liberty and the pursuit of happiness.
It's really just that simple.
If you wanna talk about what home buyers do that's dumb...... well we can write a whole book series on moronic spending habits and actions. Buy/build in a flood plane and not insure. Own/build in a fire prone CA area and NOT have insurance. Buy a flip using HML and leveraging to the gills on hopeium your gonna figure out how to reno before the pennies in the pockets run out.
Oh, I can go on and on with no shortage of much MUCH dumber and harmful things people freely are allowed to do in real estate DAILY vs a term of 20yrs longer.
It's arguing the dangers of a kid playing with the "Roman Candle" of a 50yr term while other kids are lobbing grenades around.
How about the genius of using credit cards to do investing? Your talking about a 50yr and it's what, maybe 7, 7.5% interest rate. How about 22%, 28%, 30%+!!!!

>If you wanna talk about what home buyers do that's dumb...... well we can write a whole book series on moronic spending habits and actions. Buy/build in a flood plane and not insure. Own/build in a fire prone CA area and NOT have insurance. Buy a flip using HML and leveraging to the gills on hopeium your gonna figure out how to reno before the pennies in the pockets run out.

My favorites: rely on significant rate reduction in the near term and rely on either significant rent growth or appreciation in the near term.

Do not get this confused with the virtually certain long term rent growth and appreciation.

We allow investors to buy huge cash negative houses that can only carry that large a negative for a few or couple years. They need rent growth to slow the eroding of their reserves. Without significant apprection that could allow some extraction of value, the negative cash flow on some of these purchases at some point will go through most newbies reserves forcing a sale, They are adults and made adult decisions and took adult risks. These risks seem far higher that the risks associated with a 20 year longer term.

I question what percentage of experienced RE investors (let’s use arbitrarily $5M of re assets) would choose a 30 year mortgage? My belief is it is over 75% but I admit that is my belief and not based on data I have seen. If my estimate is anywhere close to accurate, do you see any reason the same rationale would not be used to choose the 50 year? I know that I would leap at 50 year financing if its only additional cost was a 0.5% rate increase. This is for the same reason that every loan I have taken since 1992 (that was a 20 year term only because that lender was not going longer term and other lenders with longer term had over 1% higher rate) has been a 30 year loan. I am not sure how many loans that has been but I did 8 on one day once (strongly do not recommend as it was 6 hours of signings and we missed something that cost us a fair amount of money). Maybe 50 loan signings at 30 year term since that 20 year term in 1992.

I believe if a 50 year is available at only 0.5% rate increase, that it will be a popular loan option.

1 Reply

Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

10mo

The average home owner only lives there for 5 to 8 years, the idea of total interest over 30 years really does not apply to most home owners. If lower payments get people into their first home, I think it is a great idea. The problem is if 50 year mortgages do happen, how likely is it that sales prices would just go up instantly to reflect the increased buying power? In markets with more demand then supply I think this will just give prices another boost. This will likely help those who already own through some extra appreciation!

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50 Year Mortgage Should only be offered to Investors

50 Year Mortgage Should only be offered to Investors

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