With mortgage rates and the cost of homes still stubbornly high, homeownership is unaffordable for many Americans. President Trump proposed a 50-year mortgage, increasing the life of the loan by two decades from the most popular 30-year plan.
While this would lower monthly payments, it comes with some major downsides.
Fortune Magazine analyzed the plan and said it would save about 119 dollars a month for the average home. This could really help first-time home buyers.
“First-time homebuyers were pretty much kicked out of the market because it is so competitive,” said realtors Steve and Denise Taylor.
This model works well for starter homes if the buyer plans to sell in five to 10 years. The downside, economists say, homeowners would pay double the amount of interest in the long run.
Fortune said a $500,000 home at an interest rate of 6.1% would accrue one million dollars in interest over the 50-year loan period!
Lower monthly payments would help tens of thousands of home buyers, but it would come with a long-term cost.