Last week in my blog, Is the 50 year mortgage a good idea for real estate, I asked each of you what you thought in the survey. The response was surprising and very different than what I thought it would be The comments were insightful as to why.
What do real estate pros say about the 50 year mortgage?
The overwhelming majority felt that a 50 year mortgage was a good idea (45%) or that the 50 year mortgage would have little impact on the market (20%) with 35% noting that a 50 year mortgage would actually hurt the market.
Key insights from readers on the 50 year mortgage
Here are some of the key comments that were mentioned when answering the survey on the economy:
- The mortgage interest deduction is one of the last itemized deductions available to individuals when filing their taxes. Although it has been limited by the caps on deductions, those caps may be going away. So, while a buyer will have limited amortization, they will have a maximum tax deduction, almost an interest-only mortgage (which many CA residents use already).
- Mortgages are historically replaced every 4-7 years so the term is irrelevant. In order to reduce the payment simply create an amortization schedule that the secondary market will purchase based on return or use interest only pymts so a buyer can select when to make principal payments.
- Better than just renting to add pride of ownership to someone who would otherwise be stuck renting. I know the equity building would be slow. It then they could take advantage of appreciation over the years that would also benefit them more than renting.
- If a 50 year mortgage is implemented the borrowers that need this product the most will have the least amount of equity and will be considerably more likely to default
- Well, a 50 year mortgage would be completely ruinous to the personal financial status of the borrower, it would move some houses and that would in the short-term help the real estate market.
50 year mortgage good or bad idea?
Thank you everyone for your participation and insights in my survey. The insight in the comments from readers was amazing and as you can see there are very different/polarizing thoughts on the 50 year mortgage. My key takeaway from this survey is that most readers agree that if a 50 year mortgage is implemented it could increase homeownership incrementally which would have huge social benefits. It is also important to note that the million dollar unanswered question in the 50 year mortgage discussion is will secondary buyers want this product and what will be the risk premium. We will have to stay tuned to see how this discussion evolves. Thanks again for your insight and stay tuned for upcoming surveys
Additional Reading/Resources:
- https://www.fairviewlending.com/50-year-mortgage-fundamental-flaw-in-the-media/
- https://www.fairviewlending.com/why-will-real-estate-will-outperform-in-the-next-cycle/
- https://www.fairviewlending.com/trucks-signal-a-recession-my-data-says-opposite/
- https://www.fairviewlending.com/fed-drops-rates-why-did-mortgage-rates-barely-budge/
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends . I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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