By Rita Cook
Correspondent
Texas Metro News
WASHINGTON D.C. – First, we heard about 15-year car loans, then 50-year home mortgages, then there were websites saying that information was fake. Then it turns out the outlet reporting fake news was apparently spewing the fake news too, so what are Americans supposed to believe anymore?
Just to set the record straight, news outlet really should just stay with reporting real news and not resort to debunking someone else news.
Turns out, President Donald Trump really has been discussing the idea of 50-year mortgages to make homeownership more affordable.
According to a CBS News report the Federal Housing Finance Agency Director Bill Pulte has been discussing and considering the idea of the 50-year mortgage.
He called it a “game changer.”
For most homebuyers, a 30-year loan is the sweet spot.
In the future if a home buyer did opt for 50 years it would obviously lower the monthly payment but dramatically increase the overall cost of the loan since the interest rate total would be higher.
As an example, if you bought a $400,000 home with a down payment of 10%, and an interest rate of 6.25% you would finance about $360,000. So over 50 years you would end up paying a lot more interest dollars since at the beginning of a loan more of the monthly payment pays the interest, not the principal.
Homeowners in the market today have almost been shut out of affording a new home since anywhere from 35% to 40% of a person’s salary goes toward housing and often that is just not possible anymore.
To that end, President Trump has been looking for ways to help homeowners afford homes, but the 50-year loan has not quite become the best option yet.
As for Trump’s opinion on the option of a 40 or 50-year, he said “It’s not even a big deal.”
That could be true since people buy and sell their homes before their 30-year mortgage is even paid off anyway.
Trump told FOX News “All it means is you pay less per month. You pay for it over a longer period of time. It is not like a big factor. It might help a little bit.”
Pulte also said the U.S. Federal Housing Agency is working on ways to give relief in the five, 10 and 15-year mortgage category too.
“Everyone is working together to implement the president’s policies,” White House spokesperson Davis Ingle said when discussing the 50-year loan idea.
Reports show home sales did go up in September, but sales that were pending remained flat even with lower mortgage rates.
The Federal Housing Finance Agency indicates prices are up about 2.2% year-over-year in the third quarter of this year with home transactions at 1.2%.
Mortgage rates are also in the six-percent range for typical home buyers.
Trump has been urging rate cuts, but DailyEconomy.org said the current housing market “presents a strange tableau: home prices are still rising, but at a slowing pace.”
As for the idea of a 50-year mortgage, this is a housing-finance reform idea that would create the same change that Franklin D. Roosevelt’s New Deal created in 1932 with the 30-year mortgage.
And the New Deal’s 30-year plan was basically the outcome of government intervention just as Trump’s 50-year mortgage plan would be the “next step in an 80-year continuum of policy-driven mortgage evolution,” according to DailyEconomy.org.
