How to control finances on a limited budget
Are you living on a strict financial budget? That doesn’t mean you can’t manage your money.
- Interest rates on a 50-year mortgage are higher than on a 30-year mortgage. And you’ll continue to pay for many more years.
- Mark Zandi, chief economist at Moody’s Analytics, says there’s not much difference between homeowners with 50-year mortgages and renters.
- Betsy Stevenson, a professor of public policy and economics at the University of Michigan, warns that home values could fall.
50 year mortgage? A 15 year car loan? Is this the only way the middle class can now get a glimpse of the American Dream? Will you remain in debt for decades?
Not a fan.
Social media was abuzz with the topic of mortgages after President Donald Trump floated the idea of 50-year mortgages in a post on Truth Social on Saturday.
One of Trump’s posts features a photo of President Franklin D. Roosevelt with the caption “30 Year Mortgage,” and a photo of President Donald Trump with the caption “50 Year Mortgage.” Banner above both photos: “The Great American President.” Although the Roosevelt administration is credited with creating the 30-year mortgage, 30-year mortgages were not widely adopted until much later.
White House press secretary Caroline Levitt was asked about the 50-year mortgage proposal on Wednesday, November 12, and said the mortgage was still under discussion.
“This is a proposal that the president himself commented on,” Levitt said. “This is something the administration is discussing and seriously considering.”
She also confirmed that the White House and administration are seriously considering the possibility of $2,000 payments to Americans. President Trump has said he wants to send stimulus checks or tariff dividends to all Americans from revenue from increased tariffs in 2025. The Supreme Court is currently considering the limits of President Trump’s tariff powers.
What about a 15 year car loan? More on this later, but some say this is not a real strategy and is just a joke.
Indeed, extending mortgage payments for another 20 years would provide the lowest monthly payments possible, giving some people the ability to afford homes they otherwise wouldn’t be able to afford.
But at what cost? In the long run, you’ll end up paying far more in finance charges than if you took out a 15- or 30-year mortgage. That’s cash flying into someone else’s pocket, not yours.
Interest rates on a 50-year mortgage are higher than on a 30-year mortgage. And you’ll continue to pay for many more years.
Don’t get me wrong, you’re not building equity in your home early in the game with a 50-year mortgage. Some products may require interest-only payments over several years.
While the idea is interesting, it’s clearly not a good deal for everyone.
Lawrence Yun, chief economist at the National Association of Realtors, offered one example in a prepared statement.
Consider a simplified example of a $420,000 loan with a 20% down payment and 6.3% interest rate. In this example, a 50-year loan would cost about $236 less per month than a 30-year loan, according to Yun’s numbers. In reality, he said, borrowers will likely face higher interest rates on a 50-year loan than on a 30-year loan, and their monthly payments will likely be a bit higher.
He says the small savings come with big trade-offs.
With wealth growth so slow, it will be very difficult to trade up to buy a larger home or upgrade to a smaller home, he said. He also said it would take almost 40 years to pay off half of the balance, meaning most borrowers won’t start building meaningful equity until the final 10 years of their mortgage.
He said the strategy could work for some people, including homeowners who are able to refinance or are willing to sell if their home increases in value. He noted that historically home prices have been rising.
Yun said that even if there is little principal accumulation from mortgage payments, homeowners can still participate in the appreciation of home prices in a given market and the associated accumulation of home equity.
“Longer loan terms do not address the real cause of today’s affordability challenges: the limited supply of low- and mid-priced housing,” Yun said.
I remember back in 2006-2007 when 40-year mortgages and 50-year adjustable rate mortgages were a hot topic for people who were struggling to buy a home. If you had to sell when home prices crashed, it didn’t work out.
The 40-year mortgage dates back to the early 1980s, when fixed interest rates of 18% locked consumers out of buying a home, according to a previous report in the Detroit Free Press, part of the USA TODAY Network. It was never the most popular product.
For many everyday homeowners, the increased risks and long-term costs can outweigh the benefits.
Calculate your 50 year mortgage numbers
Bankrate.com financial analyst Stephen Cates also released some numbers. He said lenders are likely to charge higher interest rates on 50-year mortgages than on 30-year mortgages in exchange for taking out longer, riskier loans.
According to his calculations, a borrower could end up paying a 7.06% interest rate on a 50-year mortgage, when the average rate on a 30-year mortgage was 6.31%.
For example, on a $320,000 loan, he said, a borrower would pay about $393,800 in total interest over the life of a 30-year mortgage, and just over $844,000 over the life of a 50-year mortgage.
How much will you save on your monthly payments? About $42 per month.
The 30-year mortgage payment in this example is $1,982.80.
A 50-year mortgage is $1,940.11 per month.
“You slowly gain equity with each payment, which can be excruciatingly long on a 50-year mortgage,” Cates says.
He said that in the time it would take to pay off a 30-year mortgage, you would pay less than a quarter of the principal on a 50-year mortgage product.
Isn’t it just a rental?
“There’s not much difference between a homeowner with a 50-year mortgage and a renter,” said Mark Zandi, chief economist at Moody’s Analytics.
When talking about a 50-year mortgage, Zandi explained that most of the monthly mortgage payment covers the unpaid interest, especially during the first 10 years of the loan.
“Because it is difficult to build equity with such loans, there is a high probability that the borrower will default on the loan, which will result in higher interest rates,” Zandi said.
Zandi said it’s important to consider different mortgage products to achieve home affordability, but he doesn’t think a 50-year mortgage will do much to help with that.
40 year mortgage available
If you look closely, some lenders are now offering 40-year mortgages.
Rocket Mortgage notes online that the Detroit-based giant offers 40-year mortgages, with interest-only payments for the first 10 years. These mortgages are available in loan amounts from $125,000 to $2 million.
Rocket says online that a 40-year mortgage requires a down payment of 10% to 40%, depending on the loan amount and whether the loan is used to purchase a home or as a cash-out refinance.
Lenders must also add other limits to manage risk. Lockett notes that borrowers will need six to 12 months worth of savings in case of a loss of income and a qualifying credit score in the 660 to 740 range.
The outlook for 50-year mortgages is already grim.
President Trump’s 50-year mortgage plan ended up receiving a lot of pushback from liberals and conservatives.
Politico reports that White House officials are “furious at Bill Pruitt, the head of the Federal Housing Finance Agency, who persuaded the president to propose a 50-year mortgage plan.”
“The White House has been blindsided by the idea and is now grappling with fierce opposition from conservative allies, business leaders and members of Congress,” Politico reported, according to two people familiar with the matter who asked not to be identified to discuss internal thinking.
However, many families cannot afford to buy a home, and this is a problem that needs to be solved.
Home prices have increased dramatically in many communities in recent years. My income couldn’t keep up. And interest rates are high. Some say we are facing a crisis when it comes to affordability.
But consumers are feeling limited in all areas, including healthcare, groceries, and student loan debt. The list is endless. High costs in many areas also contribute to overall financial stress.
But many say 50-year mortgages are unlikely to change much in terms of affordability.
Many communities continue to suffer from a lack of affordable housing, and housing supply remains tight in many areas.
Betsy Stevenson, a professor of public policy and economics at the University of Michigan, is well known as a voice for economics thanks to her social media posts and guest appearances on MSNBC, NPR, and other shows that help break things down.
In a Nov. 10 post, Stevenson issued a prescient warning, pointing to what should have become clear after the 2007-2009 economic crisis, which featured a massive housing meltdown.
Bottom line: Home prices don’t necessarily increase significantly. A lot depends on when and where you bought the home and how much you paid for it.
“If you bought in Memphis, Cleveland, Birmingham, if you bought 50 years ago with a 50-year mortgage, you would have lost a lot of money,” Stevenson said.
Stevenson also pointed out that the value of homes could go down, especially if people don’t spend money on upkeep. “Come and see the homes where seniors lived for years with $0 upkeep.
“Housing is a great forced savings mechanism,” Stevenson said in X. “Housing is a source of joy and a connection to a community. It’s not free money.”
Do you want a 15-year car loan?
What about a 15 year car loan? Well, while the idea is a bad one, it doesn’t seem to be one that was promoted by the White House on social media, although some people thought so. Experts warn that the 15-year car loan meme did not originate from the White House, as some have suggested.
Online fact-checking site Lead Stories published a headline stating that President Trump never promoted a 15-year car loan on social media. According to the article, President Trump did not ask the Departments of Transportation and Commerce to greenlight 15-year auto loans. According to the headline, “Just kidding.”
A 15 year car loan is a joke.
According to S&P Global Mobility, the average age of a vehicle in the United States in 2025 is 12.8 years.
The average age of passenger cars was 14.5 years, compared to 11.9 years for light trucks. At the end of a 15-year car loan, your car is actually worth very little. And the risk of being underwater on that auto loan (if you owe much more than the trade-in value of the car) skyrockets with a 15-year auto loan.
Cates said the basic collateral for an auto loan is the car, which is a depreciating asset. In contrast, homes often increase in value over time.
“I don’t think a standard 15-year car loan is viable,” Cates said. He pointed out that there are several classic car loans for car collectors available for 15 years with an average interest rate of 9.02%.
Jonathan Gregory, senior manager in Cox Automotive’s economic and industry insights team, said about 27% of auto loans currently have terms longer than 72 months or six years. That’s a sign that lenders are working with buyers to lower monthly payments, he said.
“Lowering your monthly payment doesn’t make your car more affordable in the long run,” Gregory says. “Longer loans make the vehicle more expensive, which only adds to the long-term negative equity problem.”
Certainly, moving from a four-year car loan to a six- or seven-year car loan helped move some metals. But don’t bet on a 15-year car loan that will get you out of trouble quickly. The same goes for a 50-year mortgage.
Detroit Free Press Washington correspondent Todd Spangler contributed to this report.
Contact personal finance columnist Susan Tompol: stompor@freepress.com. follow himr X @tompor.
