Don't bite

Stephen Green:

Dear Young Americans: I'm Begging You Not to Take Trump's 50-Year Mortgage

The typical mortgage these days is $324,000. At 6% over 30 years, borrowers pay $1,942 a month, and over the course of the loan, $375,315.73. Extend that term to 50 years, and young homeowners get that monthly payment down to $1,705 — a savings of less than $250. But interest payments balloon to $699,331.

Let's call that what it really is: indentured servitude to a giant bank. 

But maybe the worst part is the loss of equity. As Glenn Reynolds mentioned earlier today on Instapundit, "this is basically something close to an interest-only mortgage." Buyers might save a couple hundred bucks a month in mortgage payments, but it will be years before they get any equity in their homes. When it's time to trade up because of a better job or a bun in the oven, they won't OWN enough of the house they bought to roll that value into their next house.

President Trump is a real estate guy, and he knows all this. Honestly, there isn't much the president can do about housing costs. Interest rates are largely determined by the Fed, and it's state and local regulations that put the squeeze on the supply.

Why he’s pushing these 50-year absurdities, I have no idea — maybe it’s just smart politics, a way to look like he’s tackling the housing-affordability crisis.

No, people don’t live in the same house for 50 years, but there’s no way to build equity while they do own a house if they’re paying what’s essentially an interest-only mortgage. Build more houses, not more debt.