by Pa Rock
Citizen Journalist
Most people are in their thirties or close to it when they sell their souls to the bank for the first time and take out a mortage to buy a home or a business, and then, God love 'em, if they are smart they struggle to pay that sucker off as quickly as possible.
(Do you want to live in your own home, or the bank's?) (Do you want to run your own business, or the bank's?)
It doesn't feel like it is completely yours until the bank is out of the equation, and, in reality, it isn't.
At one time I was a real estate salesman and broker, and I carried a small pocket calculator that could figure amortization schedules, or how much loan interest and principal would be made up by each payment. I no longer have that handy instrument, nor the ability to figure it in my tired old head, but I know, as each of you likely do, that the early payments are far more interest than they are payments on principal. I also remember clearly from my time in real estate and also my time as a mortgage-laden homeowner, that the shorter the period of the loan, the higher the house payments - but principal was getting paid more quickly and the sooner a person actually "owned" the home they were working to get paid off.
I've had several mortages in my time, but never one exceeding fifteen years - and I always had them paid off early. If I had an extra fifty dollars on the payment day, or even just a twenty, I would apply it to the princiepal knowing that it would knock off time toward the end of the loan. It was frugality and common sense. Until that damned thing was paid off, the bank was a partner in my life.
Home and busienss loans could be had for up to thirty years, and tacking on those extra years lowered the amount of the monthly payments - but not as significantly as many young, first-time borrowers think they will. Overall, the amount of actual cash that leaves your pocket and goes into the bank's pocket is significant. The greater the length of the loan, the more you actuually wind up paying for your property or business enterprise. It's just basic math and compound interest.
30-year-loans have been the banking industry standard for home loans. The most common and maximum length for government guaranteed home loans (FHA, VA, and USDA) is 30-years when offered as a fixed-rate mortgage (one that remains the same over the length of the loan). It has apparently been thirty years as the maximum since the FDR administration during the Great Depression of the 1930's.
But now that could possibly change.
This week in one of his "whim" postings on TruthSocial, Donald Trump, who owns that media platform and regularly uses it for official pronouncements and as a way to antagonize the press or certain segments of the public, announced that the government might soon back 50-year mortgages because that would lower house payments and increase "affordability." His post stirred controversy on the political left and on the political right. Trump, a man who is well known in bankruptcy court, seemed to lack a basic understanding of how mortgages actually work and impact people.
A young couple buys their first home at age thirty, and if the housing market isn't on fire and they can't sell at a profit within a few years, they wind up stuck in the same "starter" home for fifty long years and finally get it paid off when they are eighty, just about the time their kids are shuffling them off to Shady Pines.
Even the idea of a fifty-year loan is an affront to human dignity and freedom. Put more government resources into home-building, Donbo, and bring those prices down so that more people can get into the housing market - with fifteen-or-twenty-year mortgages.
That's waht "affordability" is about - not feeding billionaire bankers for the rest of their lives - and ours!
More housing now! Increase the supply and bring down the damed costs - of buying and borrowing!
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