It's not even a big deal. I mean, you know, you go from 40 to 50 years, and what it means is you pay something less. From 30, some people had a 40, and now they have a 50. All it means is you pay less per month. You pay it over a longer period of time. It's not like a big factor. Kevin, start with you. What do you think? Good idea? No. Hey, guys, I'm doing this quick video because many of you have asked my take on the 50-year mortgage. Trump, the other day, floated out the 50-year mortgage idea. and first thing I'll say is 50-year mortgage from the United States point of view. When you're looking at housing prices, when you're looking at affordability, you want new buyers to be able to get into the market. Does this accomplish that scenario? And I would say overall, no. I think that this is not great for the housing market in general. I think it's just going to only increase the prices. It comes down to supply and demand. You flood the market with more people potentially being able to buy, prices are going to go up. And so. Um, the only way to make the prices come down is if you increase the inventory, quite frankly, just by allowing more people to buy doesn't necessarily solve, solve the issues. That number one is housing market is going to continue to go up. If this, if this happens, a new buyers, as a result, things are going to get more competitive. So by default, just because you can buy a home doesn't mean you should buy a home and make the argument that a lot of people should not buy homes. And this is a perfect example. Why? But if your whole goal in life is to buy a home, yes, this allows you to. potentially be able to afford a home, just like so many other people that now can, quote unquote, afford a home. And I say that with quotations because I think it doesn't actually make it that much more affordable. The price is increasing with the potential interest rate increasing is going to make this thing a total disaster when it comes to new buyers wanting to get into the market. Now, is this good for the United States? From the United States point of view, are 50 year mortgages good assets to insure? The answer is no. Like 30 year mortgages are crazy. for the United States. That's that's why I think the 30 year mortgage is amazing for an individual. I'm like, I get to short the U.S. dollar for the next 30 years. Like, that's incredible. There's a reason no like banks get behind this. They sell off the mortgages because they don't even want to hold on to that risk. And so the idea of 50 years is insane. So either the interest rate will have to be a lot higher or the government will have to subsidize and as a result, take an L. And that's we're going to have to pay for that somehow. So. Number one, don't necessarily think it's great for the United States. Who is it potentially great for? It's potentially great for two people. Person number one who wants to sell their home and doesn't necessarily want to buy again. So they want to sell. They either want to downsize or rent. They potentially could get more for their home and then not necessarily have to now be in the market again buying another house that's inflated. The other person that it's good for are people that are building. They could build a house and then be able to find a creative way to sell it. And then obviously. a 50 year mortgage potentially allows you to charge more or have people just buy the house and get it off your hands. And so I think for builders, this could be a benefit just as it relates to their business model. But overall, I want to be very clear. I do not think that this is good for America. Don't think this is good for new home buyers. Don't think this is good for the housing market. And if you look at the opinions that people have, I think this is one thing that's uniting both the left and the right. I've never seen more. people come on board and say, this is a bad idea. You have the left hates it, the right hates it, and the ultra right hates it. And so I just think from a messaging standpoint where Trump maybe is like, hey, more people would be able to afford the home. What people are seeing is you're going to be a slave for the next 50 years. And that's where I want to talk about next, because people are freaking out for good reason. But then they're using one example of why this thing is terrible over and over and over again. And this is where I'm like, man, you're making me have to make a video on this because I'm seeing so many people talk about something that is very much of a half truth. And I just was very clear. I'm not pro this as for society, but let's address what everyone's talking about. Everyone's talking about the amount of interest that you'd be paying, the amount of interest that you'd be paying. You'd be paying for double your home and interest over 50 years. So the example I'll use is let's take a $600,000 house example. Just to make things simple, I am assuming zero down payments just to make the math simple. I'm also assuming the same interest rate. 50-year mortgage would have a higher interest rate. So these examples may be a little bit more extreme, but I just, from simplicity standpoint, want to keep it the same. So let's take a $600,000 home, 30-year mortgage at 6%, your payment's going to be $3,600. You're going to pay a total of $695,000 worth of interest over 30 years. So that's all you care about. Your payment is $3,600. The amount of interest that you're going to be paying is just under $700,000. That's a 30-year. 50-year mortgage at 6%. Your payment, instead of being $3,600, is going to be $3,200. And the total interest that you'd be paying, drumroll please, $1,295,000. So just, let's say, $1.3 million worth of interest. That's where people stop. And they are like, can you imagine you're paying for your house more than twice in interest? That's crazy. And then the assumption would be the rich, the assumption would be the people that could pay off their home faster is going to be way ahead. And so the example would be if I had $600,000 that I had control of and I paid for that house. I wouldn't have to pay $1.3 million worth of interest. And almost everybody, I bet you if you had a poll and you said you had the ability to have $600,000 in this scenario, would you pay off your home in this scenario? Everyone would be saying yes, yes, yes, yes, yes, which is fine. They would be flooding to it. Sure, that's great because $1.3 million of interest is just insane. And yet, if you put that $600,000 in an account earning 6%, Earning 6%, which I think is pretty doable. I don't think that's crazy. Over 50 years, that $600,000 would grow to over $11 million. Now, if someone's still watching this video, you'd be like, okay, 1.3 million is a lot of money to pay an interest. But also making almost over $11 million, that's a, I mean, if you factor in the home price now, you're making over $10.4 million. Like that's a lot of money. And to be honest, it's a total wash when you factor in opportunity costs at the same interest rate. It's a total wash whether you pay cash and then take those payments over the next 50 years and compound it at 6 percent. Or if you if you do the exact opposite, just put the lump sum in. But I think it just goes back to show whenever you're looking at a situation, a lot of people get so clouded with their opinions on something or they get so emotional where they're just like, you know, anything that Trump says, some people will just say it's a terrible idea. Some people, anything that Trump says, well, they'll say it's a great idea. And then we usually lock on to either the interest that you could earn, the interest that you could pay. And the way that I would view this scenario is if there was a 50 year mortgage, I would look at a couple of things. I would look at the interest rate difference. I would look at the payment difference. I would look at my compounding assumption difference. I would look at the risk management difference. Like a lot of people are saying that, you know, it takes forever to start paying off the principal. And you just also have to understand, like, from a bank standpoint, you think. banks like shorter loans or longer loans? They like shorter loans because they get their money back. And so it's funny to me sometimes when people are like almost blaming the banks and yet the banks incentivize you to pay for 15 years because they would love to get the velocity of money faster. And so really, this goes back to where the 50 year mortgage, the only reason it could even be a potential thing is for the U.S. government to do it. And they would ultimately be taking an L. And as a result, we as the American people would be subsidizing it. So overall, my takeaway would be I would look at the numbers. I don't necessarily think it would make sense, especially if you increase the interest rate. Few hundred dollar difference in payment, I just don't think is worth it. But if there was a big enough difference, I wouldn't get emotional because of the interest that I would pay over 50 years. I'm looking at the whole scenario and opportunity costs and saying, I want to reduce my risk, give myself the ability to create more cash flow and increase my ability to grow money. And I want to do whatever I possibly can to. do all three of those. Reduce risk, increase my net worth, increase my ability to create cash flow. So that is my take. I would love to hear your thoughts. I know that there also, there's two other things that people are talking about. It's the dropping the credit scores, which again, is only going to flood the housing market price values. So that's, I see pros and cons to that. There's some people that should be able to buy a home, but their credit score doesn't allow them. I think credit score to begin with is kind of a flawed mechanism. So, but But the reality is it's just going to flood the market with more people. And will there be some people that just cannot straight up afford a home? Yes, it's just going to create more potential bad buyers. But I don't necessarily think it's going to be a crazy bubble. And then there's also talks about potentially like keeping your mortgage and being able to switch homes. That is very, very interesting. I think there's two things if I'm just thinking out loud. Number one, that potentially would create an incentive for people to sell and move around. I think some people are just... staying put because they have their like 3% mortgage. So I think on one hand, potentially could create an incentive, like that creates an incentive for people to move around. So I think that could be a positive. But I also think that, again, the people holding these 30 year, 50 year loans don't necessarily want you to hold on to that. They're almost banking on you selling every, I think the statistics like 12 or 13 years. And so I don't necessarily know that would be good from an investor standpoint. And then I get like anything, It solely benefits the people that already have mortgages. ultimately the new home buyers and getting into the market would subsidize in some capacity, whether it's overpaying for homes and all for that. So my take is if it was up to me, I would be focusing on not messing with the mortgage deal, but I would be looking more so when it comes to what do we need to do to maybe build more homes and all. The last thing I'll say is anytime we're messing with 50 year mortgages or messing with all the stuff, almost think of there are like bullets in the chamber that now are being used. And so we're getting that much closer to when there's actually a real problem. What are what are areas that we can pull? Let's take an example. Like interest rates are super low. You know, Trump wants them to continue to get lower and lower and lower. So let's say they're super low. And now the economy has a really hard time. There's one less lever that you can pull. Just to be clear, I'm not a fan of the government or the Federal Reserve pulling those levers. I'm just letting you know, like this is an example of we got to be really, really careful. All the all the things that we're using. are now bullets in the chamber that now can't be used anymore. And we're going to hit a place where it's going to be a real, real problem. And there's really no solution other than another bubble. So that's my take. I'll see you on the next video. Hey, if you're a business owner watching this video, taxes are likely your largest expense. We help business owners all over the country keep more of what they make with proper tax planning. If you're serious about keeping as much money from the government as legally possible, then book a free tax analysis call with our tax team. by clicking the link in the description or tag comment below.
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