50 Year Mortgages

Quote: GenoDRPh

If new underwriting is needed for portable mortgages, too bad. Lenders will just have to adjust.

Sorry. If I am a lender who has underwritten and got investors gor property X I should not have to be forced to mow back property Y.

Quote: SOOPOO

This is not something (50 year mortgages) I’d want our government to outlaw. As long as the terms and consequences are clear, let a consenting adult decide what kind of financial product they want. Is it smart for most homebuyers? No. But it might have made sense for me in days gone by. Just started residency. Want a house for more than I can afford the payments on a 30 year mortgage NOW. But can get the house I want with the lower payments a 50 year offers. Start my career, make bigger payments and pay it off when I want to.

Now ENCOURAGING 50 year mortgages is not something I want our government to do, either. Let customers and financial institutions decide.

My new mortgage is 15 years. After 1 year, around 1/2 my payment is principal. Not bad.

One thing you are missing, if we do 50 year mortgages we can then more easily justify 50 year treasury bonds.

Quote: rxwine

Key word is if the terms are "clear." Are the terms clear to the majority of the public?

Is there some reason there is an advantage to letting some people become prey to unscrupulous people? Just makes the unscrupulous more successful. That's not what I want to encourage. Imagine if you were allowed to leave patients confused and not understand the full risks of anesthesia, just so you could make more money perhaps.

OTOH, if someone fully understands what they're getting into, they learn the lesson they already understood to be what they might expect.

Something like when they started putting the full clear warning on cigarette packs. Go as far as reasonable to make things clear to people.

I'm completely okay disallowing certain products and services and industries that are too dangerous to the public, and that includes certain financial products and services. And if that pisses off the free marketeers, so be it. They can go cry in their beers for all I care.

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Quote: AZDuffman

Sorry. If I am a lender who has underwritten and got investors gor property X I should not have to be forced to mow back property Y.

if the new property meets underwriting criteria, shouldn't be a problem. But, I hear you otherwise. There need to be guardrails in place so that a loan for property X that meets certain loan to value criteria isn't then used later for property y, that doesn't. I mean, underwriting rules can criteria have changed over time, and there is no reason why they can't for this.

Quote: AZDuffman

One thing you are missing, if we do 50 year mortgages we can then more easily justify 50 year treasury bonds.

How would 50 year bonds be a good thing? And, why would 50 year mortgage accelerate their release even if they are?

I’ve bought a few 99 year maturity bonds. I think it was when interest rates were lower, and I got only 4.5%. So that $10k I dumped there is $450 a year for life, and upon my death my heirs can sell the bond for whatever its market value is at the time. It’s kind of like an annuity, really. Probably wasn’t a smart buy by me, but I was well aware of the pluses and minuses. I don’t think the government should prevent 99 year bonds from being sold.

Quote: Gandler

How would 50 year bonds be a good thing? And, why would 50 year mortgage accelerate their release even if they are?

I answered a few posts back where 50 year mortgages can be useful. They let me buy a house I couldn’t afford today, but could easily afford once I was making regular ‘doctor’ money. And I could make extra mortgage payments then to pay it off much sooner if I wanted to.

I hate debt. I had a 30 year mortgage on Buffalo house that I paid off in maybe 10 years.

Quote: SOOPOO

I answered a few posts back where 50 year mortgages can be useful. They let me buy a house I couldn’t afford today, but could easily afford once I was making regular ‘doctor’ money. And I could make extra mortgage payments then to pay it off much sooner if I wanted to.

I hate debt. I had a 30 year mortgage on Buffalo house that I paid off in maybe 10 years.

Not to discount your scenario, but it's a rather niche scenario that may not benefit a great number of homebuyers.

How many people would be in this similar situation, working for a few years for a modest salary until training/residency or whatever ends and then, when fully credentialed, start making real money, where a 30 years mortgage payment isn't unaffordable?

I'd venture to say that the majority of home buyers can't expect a large jump in salary in a short period of time, such as a physician completing a residency. I'd venture to say that the vast majority of employed in the US get modest raises each year.

Furthermore, how many resident doctors stay permanently in the area they did their residency? What percentage get matched to city A, do a 3 to 5 year residency and then move on to a fellowship or find permanent work in far away city B? In that case, a portable mortgage may be more useful.

Quote: GenoDRPh

Not to discount your scenario, but it's a rather niche scenario that may not benefit a great number of homebuyers.

How many people would be in this similar situation, working for a few years for a modest salary until training/residency or whatever ends and then, when fully credentialed, start making real money, where a 30 years mortgage payment isn't unaffordable?

I'd venture to say that the majority of home buyers can't expect a large jump in salary in a short period of time, such as a physician completing a residency. I'd venture to say that the vast majority of employed in the US get modest raises each year.

Furthermore, how many resident doctors stay permanently in the area they did their residency? What percentage get matched to city A, do a 3 to 5 year residency and then move on to a fellowship or find permanent work in far away city B? In that case, a portable mortgage may be more useful.

Let’s say I agree with your ‘niche’ characterization. Why can’t there be a financial product available to those that fit in that ‘niche’?

As far as how many doctors go elsewhere after residency, it’s around 1/2. The stats available are only by state, and 57% stay in the same state.

But isn’t the whole idea of a mortgage that the house is collateral for the loan? How can you expect a lending institution to just allow you to change the collateral you are putting up to secure the loan without the new house being appraised at an equal or greater value? If that is included in a ‘portable’ mortgage, that would make sense to me.

There are plenty of ‘bad’ mortgage options already available. Some variable rate options are time bombs. So are some ‘bubble mortgages’. And let’s not forget about high ‘points’ to give you a falsely lower ‘rate’.

For present mortgage, I told all the brokers do not even send me a quote if it included points. Then there is the ‘mortgage origination fee’. Most of the brokers quoted around .2%, which is around $1k. I found one guy who said that is the biggest BS. He said he makes enough money to not charge one. So I used him. Got 1/8% less than any other offer, no points, no mortgage origination fee.
Point being I didn’t need the government to help me. On an unrelated note, my mortgage has been sold twice in the year I’ve had it.