"Extending terms from 30 years to 50 years does lower monthly payments but it also substantially increases total interest paid and slows equity accumulation. An Associated Press analysis shows a median-priced home would see monthly principal and interest fall modestly under a 50-year term while the buyer could pay roughly $389,000 more in interest over the life of the loan compared with a 30-year mortgage."
"HousingWire's modeling shows similar tradeoffs and warned that regulatory and market realities could push rates higher on 50-year loans erasing some of the monthly-payment advantage. A major practical barrier is federal law and the structure of the secondary mortgage market. The Dodd-Frank era Qualified Mortgage rules generally limit insured, marketable loans to 30-year terms; Fannie Mae and Freddie Mac currently cannot buy 40- or 50-year fixed-rate loans without regulatory changes. That means any broad rollout likely would require congressional or regulatory amendments."
"HousingWire noted that a 50-year mortgage could exist as a non-QM product, but that typically brings higher rates. Industry analysts and housing economists have largely reacted skeptically. HousingWire Lead Analyst Logan Mohtashami warned against implementing the policy as a market subsidy. I understand that we have housing affordability challenges in America, but subsidizing more demand from 30- to 50-year mortgages is not the policy we want to take now, he said."
An image compared a President's 30-year mortgage with a 50-year mortgage and prompted a builder's comment about pursuing a 50-year product. Extending mortgage terms from 30 to 50 years lowers monthly payments but substantially increases total interest paid and slows homeowners' equity accumulation. An Associated Press analysis estimates a median-priced home could incur roughly $389,000 more in interest under a 50-year loan versus a 30-year loan. Modeling and analysts warn regulatory and market realities could raise rates on 50-year loans. Dodd-Frank Qualified Mortgage rules and GSE restrictions currently limit marketable fixed-rate loans to 30 years, so broader rollout would require regulatory or congressional change.
Read at www.housingwire.com
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