Okay, do a 50-year mortgage with 0 interest.
But the 50-year is mostly interest!
A 50 year mortgage is basically renting your house from the bank on a long-term lease. The only advantage is that your rent will never go up.
Look at this 30 year amortization schedule. This payment is $3000/mo on a $500k loan (no money down to lake the math easier), 6% rate. You pay through 10% of the loan in year 7, and 50% in year 21. Through the life of the loan you pay a little more than double what the loan was originally worth.
Now look at the 50 year amortization for the same loan. You save less than 400 a month, but hit 10% paid down in year 18 and 50% in year 40(!!!). Over the life of the loan you are paying triple what the loan was originally worth!
It only makes sense during periods of low interest rates. But what bank would loan out money at a low rate for that long?
Back when rates were super low during the pandemic, we refinanced down to a 15-year for essentially the same monthly payment we were paying on a 30-year, but which would save us something like half of our total mortgage cost over the life of the loan between the lower rate and the shorter term.
Obviously that’s not really an option anymore, but the idea of a 50-year mortgage does make my mind reel in a similar way. Your monthly payment on a 50-year might be a couple hundred dollars lower than on a 30, but I guarantee not even close to enough to make a meaningful difference. But you will, undoubtedly, end up paying way more in interest over the life of the loan. Maybe even as much as double the principal in interest alone.
I can think of only a few very tiny edge cases where a 30-year would benefit the buyer, and they’re only marginal benefits for people like house flippers.
In the vast majority of cases, a 50-year mortgage can only benefit the lender.
