The Trump Economy: Can’t afford it? No problem - just pay on it for the rest of your life

[B-Man]

1 minute ago, Orlando Buffalo said:

I am actually curious why everyone is having a hissy fit over it. A 50 year mortgage is not a good thing but neither is a 8 year car loan but at least with the house you might make some of that money back. Currently if I were to sell my house I would basically walk away with what I have paid into it, so I have lived rent free for the past 22 years. As long as there is still an option for the shorter mortgages then I don't see the issue, and a few advantages especially if the interest rates are lower longer term

 

 

Oh no, common sense !

 

Is that allowed here ?

 

 

[OrangeBills]

10 minutes ago, The Frankish Reich said:

So ... the free market can create 50 year loans. There's no law against it. 

If the Trump Administration throws its support behind them, what does that mean?

I can't think of any way that could be effective unless they use Fannie and Freddie to prop up that new market. And as I said, that creates risk to the government (read: the taxpayer).

 

It is a terrible idea, offset only by the much worse reality facing the country here.  

 

Is it possible that the Trump admin is talking about 15 year Auto loans and 50 year mortgages to prove a point to the Fed that rates need to be materially lower?  

(or else prices are going to crater)

[The Frankish Reich]

Just now, OrangeBills said:

 

It is a terrible idea, offset only by the much worse reality facing the country here.  

 

Is it possible that the Trump admin is talking about 15 year Auto loans and 50 year mortgages to prove a point to the Fed that rates need to be materially lower?  

(or else prices are going to crater)

Who knows what he's thinking. The mortgage thing is apparently coming from Bill Pulte, and wouldn't Pulte Homes love it.

When I see the projected payments most of them are assuming the new 50 year mortgage rate would be equivalent to the 30 year. That's ridiculous unless you are directly or indirectly subsidizing the 50 year lenders. The yield curve is a thing after all.

[OrangeBills]

15 minutes ago, The Frankish Reich said:

Who knows what he's thinking. The mortgage thing is apparently coming from Bill Pulte, and wouldn't Pulte Homes love it.

When I see the projected payments most of them are assuming the new 50 year mortgage rate would be equivalent to the 30 year. That's ridiculous unless you are directly or indirectly subsidizing the 50 year lenders. The yield curve is a thing after all.

 

I mean, the current spread between the 20-year Treasure and 30-year Treasury is a couple basis points (4.68% vs. 4.70%)   

 

How much more would you think Banks would demand for a 50-year over a 30-year (when they know the average home ownership period is 7-10 years, which BTW makes a 30-year mortgage not smart but so be it)

 

 

[teef]

19 minutes ago, Orlando Buffalo said:

I am actually curious why everyone is having a hissy fit over it. A 50 year mortgage is not a good thing but neither is a 8 year car loan but at least with the house you might make some of that money back. Currently if I were to sell my house I would basically walk away with what I have paid into it, so I have lived rent free for the past 22 years. As long as there is still an option for the shorter mortgages then I don't see the issue, and a few advantages especially if the interest rates are lower longer term

it's a terrible idea unless you love paying interest to a bank.  on average, extending a 30 to 50 year loan will decrease payments by about $300.  It will add 500k to the interest.  this isn't the invention of 50 year loans.  it's just the first time anyone has suggested it to battle the housing issue.  if people actually see this as an option, it's going to be a disaster.  all a 50 year mortgage does is allow someone to purchase something they can't already afford.

38 minutes ago, B-Man said:

 

 

Oh no, common sense !

 

Is that allowed here ?

 

 

you think this is a good suggestion by trump?

[teef]

11 minutes ago, OrangeBills said:

 

I mean, the current spread between the 20-year Treasure and 30-year Treasury is a couple basis points (4.68% vs. 4.70%)   

 

How much more would you think Banks would demand for a 50-year over a 30-year (when they know the average home ownership period is 7-10 years, which BTW makes a 30-year mortgage not smart but so be it)

 

 

if someone really only plans on being in a home 7-10 years, just pay a bit more a month and take out a 30 year mortgage.  build more equity and payout less in interest.  if any financial planner or accountant gave my kids advice to take on a 50 year mortgage, i'd have to find that person and attack them.

[The Frankish Reich]

22 minutes ago, OrangeBills said:

 

I mean, the current spread between the 20-year Treasure and 30-year Treasury is a couple basis points (4.68% vs. 4.70%)   

 

How much more would you think Banks would demand for a 50-year over a 30-year (when they know the average home ownership period is 7-10 years, which BTW makes a 30-year mortgage not smart but so be it)

 

 

True, we are in a period of compressed yield curves. 

I think more relevant is that even now a 30 year fixed rate mortgage is about 80 basis points higher than a 15.

[The Frankish Reich]

1 hour ago, Orlando Buffalo said:

I am actually curious why everyone is having a hissy fit over it. A 50 year mortgage is not a good thing but neither is a 8 year car loan but at least with the house you might make some of that money back. Currently if I were to sell my house I would basically walk away with what I have paid into it, so I have lived rent free for the past 22 years. As long as there is still an option for the shorter mortgages then I don't see the issue, and a few advantages especially if the interest rates are lower longer term

I'm not against the concept. If the free market decides to start writing 50 year loans (Bill Pulte, what's stopping you?), then we will have 50 year loans. I don't get why the federal government has a role in this unless it is to subsidize those loans in some manner. And that's what I object to.

[OrangeBills]

3 minutes ago, teef said:

if someone really only plans on being in a home 7-10 years, just pay a bit more a month and take out a 30 year mortgage.  build more equity and payout less in interest.  if any financial planner or accountant gave my kids advice to take on a 50 year mortgage, i'd have to find that person and attack them.

 

Fine, but you are getting indignant without factoring all the variables involved here

 

Like location and quality of the home/apt/condo...if the Lease payment is similar to a 30-year mortgage (again, these are USUALLY similar) and the 50-year is $200-$300 less AND I build some Equity over 7 years, maybe that's what I'd opt to do to also live in a better place?  Especially if they bring down the frictional costs associated with buying & selling (another variable)

 

The fact is during the first term the Trump Admin wanted to sell 50 and 100 year Treasuries, and everyone called them dumb...which was stupid, because it wasn't long till we were borrowing TRILLIONS at durations in the 30 day to 2 year time-frame, creating financial pressures in our system 

 

So, let's hold off on the "they're stupid" stuff 

[The Frankish Reich]

1 minute ago, OrangeBills said:

 

Fine, but you are getting indignant without factoring all the variables involved here

 

Like location and quality of the home/apt/condo...if the Lease payment is similar to a 30-year mortgage (again, these are USUALLY similar) and the 50-year is $200-$300 less AND I build some Equity over 7 years, maybe that's what I'd opt to do to also live in a better place?  Especially if they bring down the frictional costs associated with buying & selling (another variable)

 

The fact is during the first term the Trump Admin wanted to sell 50 and 100 year Treasuries, and everyone called them dumb...which was stupid, because it wasn't long till we were borrowing TRILLIONS at durations in the 30 day to 2 year time-frame, creating financial pressures in our system 

 

So, let's hold off on the "they're stupid" stuff 

There's a not-so-hidden assumption here that housing prices will always go up. And over the long term I guess that's right.

But what if there's a deep recession and housing prices - particularly in some markets - go down sharply as workers in those markets lose their jobs, are forced to move, and are forced to sell?

 

2008 is what happens.

[teef]

11 minutes ago, OrangeBills said:

 

Fine, but you are getting indignant without factoring all the variables involved here

 

Like location and quality of the home/apt/condo...if the Lease payment is similar to a 30-year mortgage (again, these are USUALLY similar) and the 50-year is $200-$300 less AND I build some Equity over 7 years, maybe that's what I'd opt to do to also live in a better place?  Especially if they bring down the frictional costs associated with buying & selling (another variable)

 

The fact is during the first term the Trump Admin wanted to sell 50 and 100 year Treasuries, and everyone called them dumb...which was stupid, because it wasn't long till we were borrowing TRILLIONS at durations in the 30 day to 2 year time-frame, creating financial pressures in our system 

 

So, let's hold off on the "they're stupid" stuff 

mortgages aren't complicated so there's no need to make it so.  you keep claiming you'll have some equity over 7 years of a 50 year mortgage.  how much equity do you think you'll have gained.  as i mentioned earlier, the majority of that equity will be from your down payment.  you'll be getting your money back with a slight bit more, but how much do you pay in interest to make that tiny bit of equity?  and where do you plan on going after 7 years of a 50 year mortgage?

 

i'm not holding on it's or they're stupid.  this is dumb.  for the president to present this as a solution is irresponsible.  on top of that, he packaged it with a 15 year car loan?  we should be insulted with the idea of a 15 year car loan.  this isn't political...it's financial.  

[OrangeBills]

3 minutes ago, teef said:

mortgages aren't complicated so there's no need to make it so.  you keep claiming you'll have some equity over 7 years of a 50 year mortgage.  how much equity do you think you'll have gained.  as i mentioned earlier, the majority of that equity will be from your down payment.  you'll be getting your money back with a slight bit more, but how much do you pay in interest to make that tiny bit of equity?  and where do you plan on going after 7 years of a 50 year mortgage?

 

i'm not holding on it's or they're stupid.  this is dumb.  for the president to present this as a solution is irresponsible.  on top of that, he packaged it with a 15 year car loan?  we should be insulted with the idea of a 15 year car loan.  this isn't political...it's financial.  

 

You keep saying "how much interest would I have paid?"...Um, you'd have paid less interest than the Montly rent you paid that was just thrown away.  

 

Your monthly rental payment will have included all the factors of home ownership - the owner's financing costs, Insurance, taxes, etc etc

 

So while the long-term interest question/point is valid (in terms of 30yr vs. 50yr., it's not relevant over a considered 7-10 year own/rent decision

 

I would assume if my monthly 50-year payment was $2,000 that I would be amortizing maybe $300/month, which over 7 years is $25,200 of Equity built up (not assuming down payment or asset appreciation)...

 

If I put down 5% down on a $500,000 home, and the asset appreciated 10% and that was my loan payment, then I'm looking at $100,000 of Equity 7 years later, and I got to live in a better place, etc etc.  

 

You guys are freaking out about the 3-5% of people who would live in the same house for 50 years, who by the way could pre-pay to over come this stuff.  

 

No sensible

[The Frankish Reich]

5 minutes ago, OrangeBills said:

 

You keep saying "how much interest would I have paid?"...Um, you'd have paid less interest than the Montly rent you paid that was just thrown away.  

 

Your monthly rental payment will have included all the factors of home ownership - the owner's financing costs, Insurance, taxes, etc etc

 

So while the long-term interest question/point is valid (in terms of 30yr vs. 50yr., it's not relevant over a considered 7-10 year own/rent decision

 

I would assume if my monthly 50-year payment was $2,000 that I would be amortizing maybe $300/month, which over 7 years is $25,200 of Equity built up (not assuming down payment or asset appreciation)...

 

If I put down 5% down on a $500,000 home, and the asset appreciated 10% and that was my loan payment, then I'm looking at $100,000 of Equity 7 years later, and I got to live in a better place, etc etc.  

 

You guys are freaking out about the 3-5% of people who would live in the same house for 50 years, who by the way could pre-pay to over come this stuff.  

 

No sensible

You sound like a mortgage lender, maybe even a subprime one 😀

[teef]

7 minutes ago, OrangeBills said:

 

You keep saying "how much interest would I have paid?"...Um, you'd have paid less interest than the Montly rent you paid that was just thrown away.  

 

Your monthly rental payment will have included all the factors of home ownership - the owner's financing costs, Insurance, taxes, etc etc

 

So while the long-term interest question/point is valid (in terms of 30yr vs. 50yr., it's not relevant over a considered 7-10 year own/rent decision

 

I would assume if my monthly 50-year payment was $2,000 that I would be amortizing maybe $300/month, which over 7 years is $25,200 of Equity built up (not assuming down payment or asset appreciation)...

 

If I put down 5% down on a $500,000 home, and the asset appreciated 10% and that was my loan payment, then I'm looking at $100,000 of Equity 7 years later, and I got to live in a better place, etc etc.  

 

You guys are freaking out about the 3-5% of people who would live in the same house for 50 years, who by the way could pre-pay to over come this stuff.  

 

No sensible

you can reason this any way you want brother.  it's a bad investment.  you said it yourself it was a bad idea.   i've never rented a home, but the full ins and taxes i'm assuming are all placed on the renter.  you'll always save more money renting.    you have no idea if i'll be spending less in interest than a monthly rental.  you make so many assumptions. a 5% down on a 500k home on a 50 year mortgage and you walk away with 100K?  no.  there's too many assumptions.

 

i have no idea why anyone would argue this is an ok fit.  tell you what.  let's put mortgages aside for a min.  sell me on a 15 year car loan now.  

[OrangeBills]

4 minutes ago, The Frankish Reich said:

You sound like a mortgage lender, maybe even a subprime one 😀

 

No, I work in Finance but not Mortgages or Commercial Lending at all

 

I'm just trying to help people understand what is going on out there, so that somewhat sensible solutions to a very serious problem are addressed in practical terms, not this rampant Anti-Trump reactionary stuff...like I said, people mocked his 100 year bond suggestion, but that looks pretty smart now (if you know Finance)

 

The 15-year Auto loan is just stupid and can be attributed to Trump says things

[milfandcookies]

25 minutes ago, teef said:

mortgages aren't complicated so there's no need to make it so.  you keep claiming you'll have some equity over 7 years of a 50 year mortgage.  how much equity do you think you'll have gained.  as i mentioned earlier, the majority of that equity will be from your down payment.  you'll be getting your money back with a slight bit more, but how much do you pay in interest to make that tiny bit of equity?  and where do you plan on going after 7 years of a 50 year mortgage?

 

i'm not holding on it's or they're stupid.  this is dumb.  for the president to present this as a solution is irresponsible.  on top of that, he packaged it with a 15 year car loan?  we should be insulted with the idea of a 15 year car loan.  this isn't political...it's financial.  

Agreed , we should be insulted. A 15 year car loan is even dumber than a 50 year mortgage 

 

the American people aren’t stupid I wish they stopped trying to act like we are

[teef]

2 minutes ago, milfandcookies said:

Agreed , we should be insulted. A 15 year car loan is even dumber than a 50 year mortgage 

 

the American people aren’t stupid I wish they stopped trying to act like we are

a 15 year car loan is the most absurd thing that i can think of.  for the president of the us to actually tweet that out is disgusting.  there's no other group that he's appealing here other than the extremely stupid, and no...it just can't be attributed to "trump just says things".   we're all hoping to fix the economy and these are the suggestions.  

so...is @Wolfgang ######ed?  the guy just laughs at everything and thinks getting rid of more illegals is going to fix the cost of housing problem.  something is off.

[milfandcookies]

3 minutes ago, teef said:

a 15 year car loan is the most absurd thing that i can think of.  for the president of the us to actually tweet that out is disgusting.  there's no other group that he's appealing here other than the extremely stupid, and no...it just can't be attributed to "trump just says things".   we're all hoping to fix the economy and these are the suggestions.  

So true what a shame I thought Trump was going to help fix this economy not give us 2nd grader type ideas.
 

Who takes the time to think of a 15 year car loan? It is so stupid it hurts my head 

 

 

Edited 1 hour ago by milfandcookies

[OrangeBills]

2 minutes ago, teef said:

a 15 year car loan is the most absurd thing that i can think of.  for the president of the us to actually tweet that out is disgusting.  there's no other group that he's appealing here other than the extremely stupid, and no...it just can't be attributed to "trump just says things".   we're all hoping to fix the economy and these are the suggestions.  

so...is @Wolfgang ######ed?  the guy just laughs at everything and thinks getting rid of more illegals is going to fix the cost of housing problem.  something is off.

 

Oh stop, where were you when Biden said dumb things every day (at least, the days he was working), and where have you been when our Gov't has subsidized and bastardized prices across a million things in our society from College to Housing to Healthcare (ACA subsidies, anyone?) 

[teef]

1 minute ago, OrangeBills said:

 

Oh stop, where were you when Biden said dumb things every day (at least, the days he was working), and where have you been when our Gov't has subsidized and bastardized prices across a million things in our society from College to Housing to Healthcare (ACA subsidies, anyone?) 

stop what?  we had an awful time with sleep joe, and now we have to go round 2 of it.  what did you think about when you heard the 15 year car loan.  i bet you thought it was ***** insane.  i'm willing to be that anyone of an age to buy a car immediately thought it was a shocking stupid idea.  but you know who didn't think that?  the president of the united states.  to that pop in your head only to quickly tweet that out is a big problem.  it's the first time i've really thought that trump was getting disconnected from reality.  i don't want to deal with this again.  none of us should.  enough.