A for sale sign in front of a home March 23, 2023. PC: Fox 11 Online
(WTAQ-WLUK) — Homebuyers may soon be able to take out 50-year mortgages.
President Donald Trump recently posted a graphic on Truth Social indicating he may allow 50-year mortgages, which was then confirmed by his housing director.
“You extend the payment and therefore extend the interest,” explained Place Perfect Realty President/Founder Mike Kunesh.
The average home in Appleton sells for about $300,000.
With 20% down at a 6% interest rate, you’d pay about $650,000 in a 30-year mortgage. With the same factors at play, you’d pay about $950,000 for that same house with a 50-year mortgage.
The upside is a lower monthly payment, but the downside is a higher cost to own the same property.
“Obviously, for short-term, it does help with the affordability of monthly payments, since rates aren’t coming down as quickly as we thought they may,” said Kristen Ambos, a Green Bay-area mortgage lender for nearly 25 years. “But long-term, it’s really not a benefit to the borrower.”
50-year mortgages could enable certain buyers to build equity, even if they pay more interest long-term.
Added Kunesh: “If you cannot afford that home to begin with, it does give you entry into the market. And once you’re into the market of owning your own home, it does create an asset and it builds wealth over time.”
This change wouldn’t happen immediately. Discussions are ongoing, and it would require a change in law. Plus, lenders would need to be comfortable giving these loans out — also not a foregone conclusion.
And then, given the opportunity, would Northeast Wisconsin residents even embrace the 50-year mortgage?
“I do think, in our market, even if it did come to fruition, [people] wouldn’t necessarily grasp it and/or throw everything into it,” said Ambos.
She says homebuyers here are generally conservative with borrowing and less inclined to take on longer loans and more interest payments.
So, it could open up the market to a few more first-time buyers. Ambos and Kunesh both say the solution is deeper, but simpler.
“It’s actually building affordable homes,” said Ambos. “It’s building it from the ground up.”
“Inventory is our problem, and we need to create more housing stock and more inventory to ultimately get through this,” said Ambos.
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