Would you sign up for a 50-year mortgage?

[marylander1940]

Good and bad.... but how many people will stay in the same home for 50 years even if they buy it when they're 25?

I doubt it a good way to build equity. 

Is a 50-year mortgage really that much crazier than a 30-year one?

WWW.NPR.ORG

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Last week, the internet piled on President Trump's proposal for a 50-year mortgage. But maybe it's not as crazy as it sounds.

 

[+ FrankR]

2 hours ago, marylander1940 said:

Good and bad.... but how many people will stay in the same home for 50 years even if they buy it when they're 25?

I doubt it a good way to build equity. 

Is a 50-year mortgage really that much crazier than a 30-year one?

WWW.NPR.ORG

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Last week, the internet piled on President Trump's proposal for a 50-year mortgage. But maybe it's not as crazy as it sounds.

 

Its a truly terrible idea, in my opinion. Only those who can’t do math will recommend it. 🤓

Edited Monday at 11:06 PM by FrankR

[+ JamesB]

In my opinion it’s a very bad idea. A 50 year mortgage may look attractive because the monthly payment is lower, but the total interest you pay becomes enormous and your equity grows at a crawl. Once you run the numbers, it becomes obvious that the small monthly savings come at the cost of paying roughly double in interest over the life of the loan.

[Rudynate]

I remember reading years ago that they were common in Japan.  The idea was that they would extend across generations.

[56harrisond]

America be like

Take 20 years to pay off student loans, 50 years to pay off a house and then die.

[BSR]

16 hours ago, JamesB said:

In my opinion it’s a very bad idea. A 50 year mortgage may look attractive because the monthly payment is lower, but the total interest you pay becomes enormous and your equity grows at a crawl. Once you run the numbers, it becomes obvious that the small monthly savings come at the cost of paying roughly double in interest over the life of the loan.

The only way it might be a good idea is if you simply cannot buy the house you want with a 30-yr loan, or there are literally no houses in your desired city/neighborhood in your price range.  If and only if with the lower payments you can make an extra payment every month directly to paying off the principal, thereby paying off your mortgage years earlier and saving yourself a sh!t-ton of interest, does a 50-year mortgage make any sense.

But who the heck has the financial discipline to make that extra payment every month?  Almost nobody.

[+ Vegas_Millennial]

When I'm in my 80s, I might consider moving up to a larger/nicer house in a neighborhood that's above my price range if I can finance it for 50 years with low down payment to give me a low monthly payment. I'll spend my Savings and Investment and Equity from my current house on escorts and travel instead of putting it into the larger/nicer house.

When I die, I will have spent down all my Savings and Investments, and the bank can forclose and take back the house.  I even hope my last check to the mortgage company bounces... Indicating that all my money was spent living life to the fullest!

When I die, I hope people say about me: "That guy sure owed me a lot of money".

Edited 6 hours ago by Vegas_Millennial

[Lotus-eater]

I wouldn't actually take 50 years to pay it off, but I can see using it as a temporary measure. The problem with these ever increasing loan terms on houses, cars, student loans, etc. is that people don't use them that way and end up paying a lot in interest, in which case renting or leasing could make better financial sense.

[Pd1_jap]

With loan terms so long you may as well be renting.

[+ purplekow]

I took a 30 year mortgage and paid it off in 15 by paying two payments at once by adding the next months principal to the usual mortgage payment.  Year 2000 dollars bought a lot more than 2025 dollars do, so paying a mortgage on a house with today's prices might seem like and likely will be a bargain in 10 years.  So, use the long term mortgage as a bridge to paying the loan off is less time.  This is especially true if you expect your career to pay you more in the future.  Those extra principal payments do get larger as time goes by so you need to account for that.  

[Kevin Slater]

2 hours ago, Pd1_jap said:

With loan terms so long you may as well be renting.

That strikes me as the one upside: you basically are renting, but with a rent cap.  After a while, that would be huge.

Kevin Slater

[Pd1_jap]

From chat gpt:

Buckle up, because we’re about to take a 50-year mortgage (aka “The Financially Forever 21 Loan”) and compare it to renting while saving like a disciplined, spreadsheet-wielding nerd in Chicago.

 

🧮 Assumptions

 

To keep us grounded in reality (unlike a 50-year mortgage):

 

Income & Rent

 

Salary: $100,000/year → ~$6,250/mo after tax-ish (rough approximation)

 

Rent: $2,400/mo (Chicago decent neighborhood, not “I hear gunshots” but not “Mag Mile penthouse”)

 

Saving: 10% of income → $10,000/year → ~$833/month

 

Savings interest: 4–6% APY (we’ll use 5% because you’re responsible but not Warren Buffett)

 

 

Home Purchase Scenario

 

Home price: $400,000 (very average Chicago)

 

Down payment: 20% = $80,000

 

Loan amount: $320,000

 

50-year mortgage interest rate: 6.5% (long-term = higher risk = higher rate)

 

 

Mortgage Payment

 

Using standard amortization math:

 

Monthly payment ≈ $1,920

(Yes… the 50-year mortgage makes it shockingly low. Banks love this.)

 

 

 

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🏚️ 50-Year Mortgage: “Congratulations, You Now Owe Us Forever”

 

📌 Total Payments Over 50 Years

 

$1,920/mo × 600 months = $1,152,000 total paid

 

Original loan: $320,000

 

Interest paid over 50 years: $832,000

 

 

> You pay 2.6× the price of the house in interest alone.

Basically buying 2.6 houses, but you only get to live in one.

Congratulations, you played yourself.

 

 

 

 

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📆 Now zoom in: First 10 years

 

In the first decade of a 50-year mortgage, your payments mostly go to interest.

You’re not “building equity”—you’re “renting from the bank but with extra steps.”

 

Payments in 10 years

 

$1,920/mo × 120 months = $230,400 total paid

 

 

How much of that is interest?

 

Roughly $205,000 in interest

 

Only $25,000 goes to principal

 

 

> After 10 years of “owning,” your loan goes from $320,000 → ~$295,000.

That’s right. 10 years later and you’ve paid off only 7.8% of the loan.

At this rate, your grandchildren will finish the mortgage for you.

 

 

 

 

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🏙️ The Renting + Saving Path: “The Competent Adult Strategy”

 

Rent for 5 years:

 

$2,400/mo × 60 = $144,000 in rent paid

 

 

Yes, rent disappears into the void… but so does your mortgage interest except the void is named “Bank of America.”

 

Savings over 5 years:

 

Save $10,000/year = $50,000 contributed

 

5% APY compounding → ≈ $55,250 saved

 

 

> You end up with $55k, which looks suspiciously like a down payment starter kit.

 

 

 

Net after 5 years:

 

Rent paid: –$144,000

 

Savings: +$55,250

 

Net cost: –$88,750

 

 

Compare that to 10-year mortgage cost in interest alone:

 

Mortgage interest after 10 years: –$205,000

 

 

 

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💥 Side-by-side: Who’s the bigger financial masochist?

 

After 10 years on a 50-year mortgage:

 

Category Amount

 

Total Paid $230,400

Interest $205,000

Principal Paid $25,000

Remaining Loan $295,000

 

 

After 5 years renting + saving:

 

Category Amount

 

Rent Paid $144,000

Savings Accumulated $55,250

Down Payment Progress 55% to 70% of a realistic down payment

 

 

> Renting in this scenario burns money.

A 50-year mortgage incinerates it with a flamethrower.

 

 

 

 

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🎤 Smartass Summary

 

🏚️ 50-year mortgage:

 

“Congratulations, you’ve unlocked Decades of Interest Payments.”

 

After 10 years, you still owe 92% of the loan.

 

You paid the bank $205k to reduce your balance by only $25k.

 

Financial equivalent of trying to empty Lake Michigan using a Starbucks straw.

 

 

🏢 Renting + saving:

 

Yes, rent disappears… like Thanos snapped your money.

 

But saving 10% builds actual financial power.

 

After 5 years you have $55,000 working for you.

 

You’re in striking range of a normal mortgage that doesn’t last longer than some dictatorships.

 

 

 

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🧨 Conclusion (Sarcastic, Nerd-Approved)

 

If your goal is to:

 

Give a bank the financial equivalent of a lap dance

 

Own barely more of your home after 10 years than when you started

 

And tell your heirs, “Surprise, you still owe money!”

 

 

Then the 50-year mortgage is perfect. 👌

 

If you instead want:

 

Equity

 

Flexibility

 

And not paying nearly a million in interest

 

 

Then renting + saving wins the Chicago game.

Edited 1 hour ago by Pd1_jap
Unneeded copy

[+ JamesB]

6 hours ago, Vegas_Millennial said:

When I'm in my 80s, I might consider moving up to a larger/nicer house in a neighborhood that's above my price range if I can finance it for 50 years with low down payment to give me a low monthly payment. I'll spend my Savings and Investment and Equity from my current house on escorts and travel instead of putting it into the larger/nicer house.

When I die, I will have spent down all my Savings and Investments, and the bank can forclose and take back the house.  I even hope my last check to the mortgage company bounces... Indicating that all my money was spent living life to the fullest!

When I die, I hope people say about me: "That guy sure owed me a lot of money".

 

Inheritance is a miscalculation.

The phrase comes from the economist Franco Modigliani, who argued that in a well planned life cycle, people intend to use their savings during their lifetime. According to his theory, individuals save money while working and then spend those savings once retired, aiming to end their lives with little left over. So when someone leaves an inheritance, Modigliani suggested it usually means they overestimated how much they needed to save, or did not spend as much as planned. In that sense, the inheritance is not the goal but rather the result of an error in predicting expenses, lifespan, or future needs.