Trump’s 50-Year Mortgage: The New Deal for the Next Century
"President Trump’s 50-year mortgage proposal represents a natural evolution of a uniquely American idea.In the 1930s, Franklin D. Roosevelt’s introduction of the 30-year mortgage under the New Deal made homeownership attainable for millions.
Before the Depression, mortgages lasted three to five years, demanded 40% to 50% down payments, and required a balloon payment at maturity. Few could qualify. When the housing market collapsed, millions lost their homes.
FDR’s creation of the Federal Housing Administration (FHA) and the 30-year fixed-rate mortgage reversed that decline. By spreading repayment over three decades, the New Deal allowed working families to own homes, not merely rent them. Homeownership rates rose from roughly 44% in 1940 to 62% by 1960.
Trump’s proposal to extend the same principle to a 50-year mortgage applies this proven logic to the affordability crisis of the twenty-first century."
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1 comment:
The problem with the 50-year mortgage is that you won't build up any equity. In 30 years, you'll owe almost as much as you did in the beginning. Therefore, you are totally dependent on appreciation. It's fine, if you don't care if you actually ever own a property, but in that case, why not just rent. In other words, you will never own the property outright. If you could itemize deductions, and deduct the interest, but that's pretty much a thing of the past. And then; think about your earning power. If you buy the property when you are 30, and take a 50-year mortgage, how are you going to make the payments when you are 80? So, as I said in the beginning, you are totally dependent on appreciation.
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