From NAR
The idea of a 50-year mortgage is gaining attention as a way to make homeownership more accessible by lowering monthly payments through a longer loan term. While it can help certain buyers qualify more easily, it comes with significant long-term trade-offs.
Key Opportunities:
- Extending the term from 30 to 50 years can moderately lower monthly payments and help more buyers enter the market.
- It may be especially appealing to younger buyers or those struggling to afford high-cost markets.
Important Trade-Offs:
- Homeowners pay far more interest over the life of the loan compared to a standard 30-year mortgage.
- Equity builds much more slowly, meaning buyers gain less financial security in the early years.
- The option doesn’t solve the core issue of limited housing supply—lower payments don’t help if buyers still can’t find homes to purchase.
What This Means for REALTORS®:
- Be prepared to explain both the benefits and long-term costs to clients.
- A 50-year mortgage may be useful for specific buyers with long time horizons, but it won’t be the right choice for everyone.
- Financing innovations can help, but they don’t replace the need for more inventory and broader affordability solutions.
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