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c/news · by return2ozma@lemmy.world · 271d

Trump's 50-year mortgage gets default warning from Moody's chief economist

https://www.newsweek.com/trump-50-year-mortgage-default-warning-from-moodys-chief-economist-11079861

180 points · 11 comments · view on lemmy.world

11 Comments

aramis87@fedia.io · 46 pts · 271d (6 replies)

borrowers taking on a five-decade loan would struggle to build equity—with most payments in the first decade being on interest rather than principal. With limited equity, homeowners would have less of a financial cushion should a shock occur—a drop in house prices or unexpected expense—and therefore be at "greater risk of default on these loans." Given this heightened risk, Zandi said interest rates would be "significantly higher" than on standard 30-year mortgages, eliminating many of the cost savings that would result from the longer repayment period.

paraphrand@lemmy.world · 22 pts · 271d (3 replies)

So it’s just a scheme to squeeze the little guy more.

They want to eventually own all housing and rent it, don’t they?

Zron@lemmy.world · 6 pts · 270d (2 replies)

This is renting, just the bank is your landlord and you’re responsible for all bills and repairs.

prole@lemmy.blahaj.zone · 2 pts · 270d (1 reply)

Maybe more akin to "rent to own" since I guess you (or your children since you'll probably be dead at that point) will own the property after 50 years.

RagingRobot@lemmy.world · 1 pts · 270d

But if you don't have kids the bank just keeps it

CmdrShepard49@sh.itjust.works · 3 pts · 270d

The cost difference is insane.

For a $500k loan at 6% you're looking at $580k in interest over 30 years or about $1.1M total.

For the same house over 50 years at even 1% higher APR, you're looking at $1.3M in interest alone or $1.8M total.

You'd pay more in interest alone than you would for the entire principle + interest of a conventional 30 year mortgage and the difference in monthly payment between the two (not that this should really ever be part of the equation) is only $10, so where the fuck is the "savings?"

kryptonianCodeMonkey@lemmy.world · 2 pts · 270d

Let's also not forget that the biggest obstacle for first time homebuyers is not the monthly payments (which are typically similar to or even lower than their current rent rates, but with the added benefit of building equity) but to saving for the down payment while paying that rent. A 50 year mortgage only serves to prop up already inflated home prices, not to decrease them, meaning it does nothing at all to help someone actually become a home owner in the first place.

monis@ttrpg.network · 19 pts · 271d (2 replies)

It's all about rich vs. poor.

You and everyone you know is poor.

dan1101@lemmy.world · 9 pts · 270d (1 reply)

Yep, a millionaire is 1/1000th of a billionaire. They are much closer to being flat broke than being a billionaire.

CmdrShepard49@sh.itjust.works · 5 pts · 270d

The snazzier way of saying this is "the difference between a million dollars and a billion dollars is about a billion dollars."

Archangel1313@lemmy.ca · 16 pts · 271d

That sounds like something a radical left antifa terrorist would say.