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 Tuesday at 08:24 PM 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.

 

 

 

 

---

 

📆 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

 

 

 

---

 

💥 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.

 

 

 

 

---

 

🎤 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.

 

 

 

---

 

🧨 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 yesterday at 01:43 AM 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.

[+ purplekow]

There was a lot of information in the post reagrding life in Chicago.  I do not recall seeing tax deductions for interest payments in there.  The government does subsidize your mortgage to some extent by allowing you to take the interest as a tax deduction.   For some, that applies to the state tax as well.  There is also the benefit of a property tax deduction.  Also prices of houses, at least for now keep going up as do rents.  So what is true in 2025 may be different in 5 years.  Houses may be more expensive and rents will have certainly increased.  Again, if you can afford the rather small amount of the next months principal for the first 5 years, you will actually have paid off 10 years of the mortgage.  At that time, refinancing the mortgage at the appropriate time may get you extra cash and a better rate and a lower payback period.  In my situation, I took an adjustable 30 year mortgage, made double payments for the first three years and was able to refinance at a much better fixed rate for 15 years.  My 30 year mortgage became a 20 year mortgage and I was again able to double pay my principal to cut the length of time to repayment down further.  At 8 years, I sold that house, took the equity as a downpayment for two houses, one of which was a three family house which I rented at a profit and at a tax advantage.  

Bottom line, a long term mortgage can be leveraged against future earnings and tax breaks.  Rent for my renters was money out of their pockets into my equity and my pocket.  When I eventually sold the rental house, the renters had a place to live for the years they were there and I have several hundred thousand dollars.   Granted there were expenses I took on for repairs and upkeep, but all told, starting out with an affordable long term mortgage allowed me to juggle my finances into a much more secure financial future.  

Edited 7 hours ago by purplekow

[Lotus-eater]

1 hour ago, purplekow said:

Rent for my renters was money out of their pockets into my equity and my pocket.  When I eventually sold the rental house, the renters had a place to live for the years they were there and I have several hundred thousand dollars.   Granted there were expenses I took on for repairs and upkeep, but all told, starting out with an affordable long term mortgage allowed me to juggle my finances into a much more secure financial future.  

It's a common myth that the real estate agents like to promote that owning is better than renting because renters don't build equity. A renter who invests the equivalent of a down payment in the stock market (which yields higher returns than real estate over the long term) and invests the difference of paying less in rent than the cost of owning (which is currently the case in all 50 of the largest metro areas) can end up better off financially than someone who buys a house. 

Edited 6 hours ago by Lotus-eater

[+ purplekow]

49 minutes ago, Lotus-eater said:

It's a common myth that the real estate agents like to promote that owning is better than renting because renters don't build equity. A renter who invests the equivalent of a down payment in the stock market (which yields higher returns than real estate over the long term) and invests the difference of paying less in rent than the cost of owning (which is currently the case in all 50 of the largest metro areas) can end up better off financially than someone who buys a house. 

Renters, for the most part, are paying more per month and while if you include upkeep on the house, that may be more for the owner.  However, rents go up and there are still maintenance cost for renters, such as painting and minor repairs. This is especially so if your landlord is absentee, a large corporation or just interested in draining whatever money can be gotten from the rental.  Also an appropriate rental for a 22 year old single is not going to be appropriate for a 32 year married with a child, so the cost is likely to go up.  While a family might outgrow a house, they will have the equity to move on after a sale.  The ability to put money away will likely be more difficult for the renter as their rent goes up.   I might add, that I own my home free and clear and so at this point, renting would be much more expensive than owning and the reason that I own is because I chose to do so when I was younger.  Once the mortgage was paid, I was able to save and invest much more money than I would have if I was renting.  

As a landlord, I am glad they are people renting and if you believe this is the best way for you to live, I am grateful for the monthly payment that you make on my house.  

[jeezifonly]

Unintended consequences as bank gets more of your money:

Insurance rates?

Borrowing against home equity?

Outstanding debt ratio lowering credit rating? 

If a loan is going to outlive me and cost me along the way, I'd just as soon rent. 

 

[Lotus-eater]

2 hours ago, purplekow said:

Renters, for the most part, are paying more per month and while if you include upkeep on the house, that may be more for the owner.  However, rents go up and there are still maintenance cost for renters, such as painting and minor repairs. This is especially so if your landlord is absentee, a large corporation or just interested in draining whatever money can be gotten from the rental.  Also an appropriate rental for a 22 year old single is not going to be appropriate for a 32 year married with a child, so the cost is likely to go up.  While a family might outgrow a house, they will have the equity to move on after a sale.  The ability to put money away will likely be more difficult for the renter as their rent goes up.   I might add, that I own my home free and clear and so at this point, renting would be much more expensive than owning and the reason that I own is because I chose to do so when I was younger.  Once the mortgage was paid, I was able to save and invest much more money than I would have if I was renting.  

As a landlord, I am glad they are people renting and if you believe this is the best way for you to live, I am grateful for the monthly payment that you make on my house.  

Except the data and economists like Robert Shiller (who created the Case-Shiller Home Price Index) say otherwise. According to the article: "Housing experts said the fact that it’s cheaper to rent in all 50 metros in 2025 is a broader reflection of rental and housing market conditions across the country." It's cheaper to rent on average regardless of whether you're renting a studio or a house in those areas. And while you were paying off your mortgage, those of us who invested in stocks were earning a higher compounding rate of return:

"Trish Regan: "People trap their savings in a home. They're running an opportunity cost of not having that money liquid to earn a better return in the market. Why do it?" Robert Shiller: "Absolutely! Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems."

Shiller estimated the real return on housing between 1890-1990 to be 0-1%, which is why it's mostly a consumption good, not an investment (the returns have been higher since then but still below the stock market). And it's an especially bad investment if you take out a 50-year mortgage at a higher interest rate.

Edited 2 hours ago by Lotus-eater