December 10, 2025 • 23 mins
A 50-year mortgage sounds like the shortcut to affordability, but does it really help—or just push the bill into the future? We put the buzz to the test with clear numbers on payments, total interest, and equity growth, then map out practical alternatives that preserve your budget and your long-term wealth. Using a $400,000 example at current rates, we show why the monthly savings from 50 years is surprisingly small while the lifetime interest cost mushrooms by more than half a million dollars. From five-year to ten-year equity milestones, the story sharpens: a standard 30-year term builds significantly more wealth, faster.
We also explore smarter ways to keep payments in check without adding two decades of debt. Right-size the purchase price, negotiate with a capable agent, and consider saving a bit longer to strengthen your position—all moves that can match the 50-year payment while protecting your equity. Along the way, we talk about what actually drives mortgage rates, why markets matter more than politics, and which policy ideas could help first-time buyers without saddling them with steep interest bills.
Whether you’re weighing rent versus buy or debating between a 30-year and a 50-year term, the goal is the same: own smarter, not longer. If the choice is half a century of payments or a small adjustment in price, the math points to a clear winner. Subscribe for more straight-talk breakdowns, share this with a friend who’s house hunting, and leave a quick review to tell us where you stand on ultra-long mortgages.
To help you to navigate the home buying and mortgage process, Jonathan & Steve are currently licensed in Tennessee, Florida, Georgia, South Carolina, and Virginia, contact us today at 423-491-5405 or visit www.jonathanandsteve.com.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:01):
This is Benchmark Happening.
Brought to you by Jonathan andSteve from Benchmark Home Loan.
Northeast Tennessee, JohnsonCity, Kingsport, Bristol, the
Tri-City, one of the mostbeautiful places in the country
to live.
Tons of great things to do andawesome local businesses.
(00:22):
And on this show, you'll findout why people are dying to move
to Northeast Tennessee.
And on the way, we'll havediscussions about mortgages and
we'll interview people in thereal estate industry.
It's what we do.
This is Benchmark Happenings,brought to you by Benchmark Home
Loans.
And now your host, ChristineReed.
SPEAKER_01 (00:45):
Welcome back, everyone, to another episode of
Benchmark Happenings.
And the star of our show todayis my handsome husband, Steve
Reed with Benchmark Home Loans.
So welcome, Steve.
SPEAKER_02 (00:57):
Wow, nothing like a little bit of encouragement to
get me started.
So thank you.
Nice to be here.
SPEAKER_01 (01:02):
Well, you know, that is my gift.
I do have the gift ofencouragement.
But you know what?
I I think we have a we'reprobably going to put this
podcast up ahead of a lot ofothers because we have some
breaking news.
The government has reopened andTrump has announced a new plan
um for lending.
(01:22):
So, Steve, um, I wanted you tocome on today and talk about
this new loan amount that'sbeing circulated around.
SPEAKER_02 (01:31):
Well, it's actually the loan term that's being
circulated that's changing, sothe amounts are not, but um so
the loan term is uh talkingabout and circulating, as you
said, 50 years instead of 30years.
So um not an not an entirely newconcept, although um, you know,
(01:53):
we've had 40-year mortgagesbefore, and now they're talking
50, and other countries havetried this, it's failed
miserably, and uh so here weare.
It's the buzz of the day in themortgage industry, is talking
about a a 50-year mortgage andhow we can get more folks in
houses, which I love that part,but we're gonna have to dig into
(02:15):
this a little bit deeper.
SPEAKER_01 (02:17):
I I I like that, and I'm just I know there's gonna be
pros and cons on both sides ofthis new um long term of 50
years.
And uh so Steve, since you'rethe expert in the industry, just
wanted to get your take on that,and you know, what are the right
questions that need to be askedand and what should we be
(02:39):
looking for, and especially as alender and as a a potential home
buyer?
SPEAKER_02 (02:45):
Yeah, so the key is the right questions, and I'm so
glad you mentioned that becauseI'm seeing all these different
framings of how this could work,and is it better to have a
50-year mortgage than nomortgage at all and rent for the
rest of your life?
And you know, but that's reallythe wrong question.
(03:05):
Um, because of course it'sbetter, uh it's better to have a
hundred-year mortgage than torent for the rest of your life.
So that's not really a fairquestion.
I guess it is in some ways, butit's not the question we should
be talking to our clients aboutand the public about.
To me, um, it's it's alwaysbetter to own a home than it is
(03:29):
to to rent something, uh,especially if you're gonna be
there for more than a year ortwo.
You're better off owning basedon appreciation rates and that
kind of thing.
So let's try to.
One thing I'd like to see in theindustry is not comparing a
50-year mortgage to owning ahome.
I think what we have to do is wehave to compare a 50-year
(03:51):
mortgage to a 30-year mortgageor to a 15-year mortgage, and
then make a decision what's thebest to go with.
Now, yes, is it another optionin the tool belt to get more
people in homes?
Um, yeah, I guess so.
I mean, it's and I'm always forgetting more people in houses.
That's what we do, that's how wemake money, that's how people
(04:14):
live the American dream.
So I'm always for that, but I'mnot necessarily for a 50-year
mortgage.
I think 99 times out of ahundred, if I sit down and
explain to my clients, here's a50-year mortgage, here's a
30-year mortgage, here's a 20 or15-year mortgage, I think 99 and
a half times out of 100, they'renot going to go with a 50-year
(04:34):
mortgage, and I would notrecommend that.
So am I saying it's a horriblething?
No, it's not a horrible thing.
It's just, it's really almostnot a thing.
SPEAKER_01 (04:43):
So, so I think, Steve, you said a lot there, and
you know, we all know that homeownership, it builds wealth
because you're building equity,it's stability, it's great for
families, it's it is truly theAmerican dream.
We want people to own homes.
But unpack a 50-year mortgage,what does that look like and
(05:03):
compare it to a 30-yearmortgage?
SPEAKER_02 (05:06):
Okay.
So uh you gave me a little bitof advanced notice, so I did
some numbers, so I can unpackthat.
But let's start with a 50-yearmortgage is 600 months.
A 30-year mortgage is 360months.
SPEAKER_01 (05:22):
So let me ask you a question.
And I just thought of this.
A 50-year mortgage, are theygonna put an age limit of the
person getting the loan on a50-year mortgage?
I mean, like if someone's 80years old, are they gonna be uh
getting a 50-year mortgage?
SPEAKER_02 (05:40):
I mean, yeah, you know what?
That's called optimism.
That's called being optimistic.
Yes.
But they're no, they're notgonna put an age limit.
That's discriminatory, and wecan't do that.
So we do know how old ourclients are because we have to
get a date of birth through theapplication, but that cannot
play into the underwritingprocess.
You can be 90 years old now andget a 30-year mortgage.
(06:03):
You can be a hundred years oldand get a 30-year mortgage.
That can't weigh into it.
SPEAKER_01 (06:07):
Okay.
SPEAKER_02 (06:07):
So so anyway, that that won't be a factor.
But as far as so, do you want tounpack some numbers here?
I would like to.
So what I did, and and I reallydidn't look at sales price as
much as just loan amount, so wecould compare it.
So our median sales price aroundthe Tri-Cities here is in the
(06:28):
300-ish range,$350.
But I just went ahead and did a$400,000 loan amount for
comparison purposes.
So let's say you've got goingrate right now, six and a
quarter on a 30-year fixed, andyou're doing a 30-year loan on a
$400,000 loan amount.
(06:48):
So that now we're not countingproperty taxes or insurance or
anything.
This is just your principal andinterest payment.
So$400,000, 30-year uh fixedrate at six and a quarter.
So you're at about$2,464 permonth.
Okay.
$2,464.
That's for 30 years.
So let's say, man, I'd like todo 50 year because I really
(07:11):
can't afford this house to startwith.
So how much would you guess?
Now I know you know the answerbecause you're looking at my
sheet, but before today, howmuch would you have guessed
going from a 30 year to a 50year would save you on payments
because you're stretching it outanother 20 years?
SPEAKER_01 (07:29):
Well, I would think that, you know, if my 30 year
was a little over 2,000.
SPEAKER_02 (07:34):
2,464.
SPEAKER_01 (07:35):
And if I stretched it out.
Now, me, I'm not a numbersperson, so to me, I would think,
oh my gosh, adding 20 moreyears, that loan amount's gonna
go down by maybe half or or alittle bit.
You mean your payment, I mean.
My payment.
Yeah.
My payment.
SPEAKER_02 (07:52):
Yeah.
So so you would think maybe savea thousand dollars a month or
something, that's what I wouldthink.
Okay.
So there's two factors um herethat's gonna play in.
So number one, if you go from a30 year to a 50 year, you're
gonna probably go up on rateabout a half a percent,
three-eighths to a half, becausethe lender's guaranteeing that
rate for longer, so they're notgonna lock it in to the same
(08:13):
rate as a 30 year.
So instead of six and a quarter,you're probably gonna have six
and three quarters, which is notterrible.
I mean, maybe a half a percentmore on the rate.
You're gonna stretch out thatpayment for another 20 years,
okay, and you are going to savea whopping$134 per month.
Now, how do you like that?
SPEAKER_01 (08:32):
$134.
Well, that's uh some lattes, afew lattes every month.
SPEAKER_02 (08:40):
Exactly.
Why not cut out a pay?
SPEAKER_01 (08:42):
So tell us the the payment.
What was that payment on a30-year and a payment on a
50-year?
SPEAKER_02 (08:48):
$2,464 on a$30, $2,330 on a$50.
So it was$134 a month less on a50-year term.
SPEAKER_01 (08:59):
$134 less.
Steve, do you think that whenpeople break down these numbers
and a lender presents thisinformation to them, do you
think people are going to go fora 50-year?
SPEAKER_02 (09:14):
I would hope not.
SPEAKER_01 (09:15):
You know, I mean to save$134 a month.
SPEAKER_02 (09:18):
I would hope that wouldn't make the difference to
do it.
Um, you want to s you want tohear something even more
shocking?
SPEAKER_01 (09:25):
Yes.
SPEAKER_02 (09:26):
Your 30-year loan, total payback, and I know most
people, uh the argument's gonnabe there, well, most people
don't keep their loan 30 yearsand they don't.
But if you kept the loan toterm, your 30-year loan is gonna
pay back$887,040.
So let's just round that toeight eight hundred and
eighty-seven thousand.
Your 50-year loan, you're gonnapay back$1,398,000.
(09:53):
So you're gonna be paying almost$511,000 more dollars, which is
over half a million in intereston the 50-year versus the 30
year.
So how do you feel about that?
That's is that worth saving$134a month?
SPEAKER_01 (10:09):
No, because I'm thinking if I took that$134 a
month and just invested it,invested that money, I'd still
be better off.
SPEAKER_02 (10:19):
Yeah, yeah.
So, well, let's talk about thata little bit.
So when I look at loans, I andnormally I don't like to look
at, hey, where are you gonna bein 30 years?
Because that's a that's a longtime projection.
Most loans pay off for refinancein about five to seven to a
maximum of 10 years anyway.
So I like to sit down withclients and say, how much equity
(10:42):
are you gonna have in fiveyears?
Because a lot of clients aregrowing families, they're gonna
want to trade up to a biggerhouse or whatever.
So what's really important atthat time is how much um equity
they've got for a down paymenton their next house.
So so I like to look at that.
And so let's let's talk aboutthat and let's use four percent
(11:03):
appreciation and where you'regonna be in in five years.
So not a huge, huge difference,but in five years, now 10 years
is gonna get interesting, but infive years, 4% appreciation, and
based on what your loan will bepaid down to, your 30-year loan,
you're gonna have 106,105, 106,105 in equity.
(11:28):
106,105 dollars in equity on the30-year loan.
On the 50-year loan, you'regonna have 84,643 in equity.
So now here's where the argumentcomes in.
It's still better off to have a50-year mortgage than to be a
renter, right?
Okay.
But that's the wrong question.
(11:50):
Should a f should you have the50-year or the 30-year is the
right question, okay?
So in five years, again,$106,000in equity on your 30-year loan,
$84,643 on your 50-year loan.
So you've lost about$21,000 inequity by doing the 50-year
(12:12):
loan, okay?
So not I mean, it's not gamechanging, but it'd still be nice
to have an extra$20,000 in yourpocket when you go to buy your
next house, right?
SPEAKER_03 (12:21):
Correct.
SPEAKER_02 (12:21):
But let's look at the 10-year difference.
In 10 years on the 30-year loanat 4% appreciation, you're gonna
have just over$303,000 inequity.
The 50-year loan, using 4%appreciation and based on what
your current balance is, you'regonna have$173,000 in equity.
(12:43):
So$173,000 in your pocket versus$303 is a difference of$129,000.
So, and some change, but I'veI've rounded these numbers up,
but you know,$129,000,$130,000more in your pocket in 10 years,
that's huge.
That could be buying your dreamhouse versus I'm just, you know,
(13:03):
kind of checking off a fewboxes, but not all of them.
So to me, the 10-year markswhere it gets really
eye-opening, um, the needle'snot moved as much in five, but
it starts moving even in five,you know, you got just over
20,000, which, you know, is somemoney, but when you get to 129,
130,000 more in equity, that'swhen it's really kind of
(13:26):
eye-opening.
So, you know, what do you do?
So here's here's my solution,okay?
Or one of these solutions.
There's never one solution onesize fits all, but here's one
thing you could consider, andyou've already mentioned this,
Christine, with your astute umknowledge of financial matters
(13:46):
here.
Skip the lattes, okay?
Because you probably save$134 amonth skipping lattes, okay?
Here's another solution.
Instead of buying a$400,000house on a 50-year mortgage,
let's say that$134 makes orbreaks you, and you can't skip
the lattes because you'readdicted to coffee like we are.
SPEAKER_01 (14:07):
Oh, I've got a better one.
SPEAKER_02 (14:09):
What?
Your nails.
Oh, I like that.
SPEAKER_01 (14:12):
So a manicure, pedicure, at best, you're gonna
spend if you do it every twoweeks, eighty to a hundred
dollars with tip.
Yeah.
SPEAKER_03 (14:23):
Okay.
SPEAKER_01 (14:24):
And most people get their nails done every two
weeks.
So if you just do nails, fortybucks a pop, ten dollar tip.
So that's one hundred dollars amonth if you're just doing your
nails twice a week.
SPEAKER_02 (14:36):
Okay, but what if you're a a single male buying
this house?
And that's not an option.
SPEAKER_01 (14:42):
I don't know what it sounds like.
SPEAKER_02 (14:44):
Um Okay, so but that's a great that's a great if
that's good for couples or for asingle female, but let's but um
so here's my uh summary on thisor my idea.
Instead of buying the$400,000house, you gotta save, let's
just keep in mind you gotta savethe$134.
It's a make or break.
(15:04):
You gotta do it.
Go to the$380,000 30-year loan,and it's almost the same payment
is the$400,000 50-year loanpayment.
You save about, you know,$144 amonth by going down$20 or$20,000
(15:24):
on price.
Okay, so just go down or save up$20,000.
SPEAKER_03 (15:28):
Right.
SPEAKER_02 (15:29):
Save up$20,000 more and do the 30-year loan, go down
$20,000 in price.
Don't get your nails, don't doyour manny petty, don't buy your
I mean, so there's a lot of waysto not do a 50-year loan.
And that's what we're kind oftalking about here, right?
How can we avoid a 50-year loan?
Which I would want to at allcost unless it was versus
(15:51):
renting.
Now, if I'm looking at it versusrenting and I got to save that
134, heck yeah, I'm doing a50-year mortgage, okay?
So that's probably gonna be lessthan 1% of the time.
But let's look at alternativeson how we could put you in a
better financial position by nothaving to do the 50-year loan.
Again, I'm not saying it's aterrible thing, but I am saying
(16:13):
ask the right questions, makesure, you know, make sure you're
looking at everything correctly.
Now, let's let's take one morecomparison out there and we'll
we'll kind of stop with thecomparisons.
But um let's say you do the50-year loan and 400,000 and you
got whatever equity you've gotin 10 years, what do we say you
(16:33):
would have?
173,000?
SPEAKER_01 (16:35):
Yeah, 173K.
SPEAKER_02 (16:37):
If you did 380 and did the 30-year loan, the unit
and so you're paying this isapples to apples because you're
paying about the same payment,right?
Okay.
The payment on 30, on 30 yearsfor 380 is about the same as 50
years at 400, right?
But you've kind of, you know,you've backed off.
You haven't done your 50-yearmortgage, you've done 30 and
(16:59):
you've done 20,000 less.
Guess what?
What?
You've got 40,000 more in equityon the 380 house than you did
the 400 on a 50-year mortgage.
SPEAKER_01 (17:11):
Is that in five years?
SPEAKER_02 (17:12):
That's in 10 years.
So you've just put 40 morethousand in your pocket for the
same amount of monthly payment.
Same amount of monthly payment,and you've put 40,000 more in
your pocket.
So what's the smartest way togo?
Of course, it's to do the30-year loan.
So, um, but I don't want peopleout there to be throwing rocks
(17:34):
at me saying, well, you you saidthere's no use for a 50-year
loan.
No, I'm still for a 50-yearoverrenting.
Okay.
Sure.
Let's get the the bottom line.
But I'm not over, I mean, uh the50 year will be hard to make me
decide to do that over a 30-yearloan unless someone just don't
qualify.
SPEAKER_01 (17:53):
Well, and a lot of times, you know, negotiating
your price of a home with ahomeowner, you know, if if you
have a great realtor, you know,they can help you negotiate that
cost down, you know, and get youto that 380.
SPEAKER_02 (18:06):
Great point.
Absolutely.
SPEAKER_01 (18:08):
You know, so that that's an important thing, you
know, know your realtor, makesure your realtor can negotiate
for you, that they're in your inyour court.
And I'll I'll just say this,Steve.
I really think that the federalgovernment, they're really not
addressing the issue.
They've come out with a 50-yearterm for a home loan.
(18:31):
Why in the world can they notwork on reducing the interest
rate?
But it's almost like it's aswitch and bait.
It's like instead of working toreduce that interest rate, which
we all need a reduced interestrate, that would drive home
ownership more, people thatwould drive the housing market
more, but instead now they comeout with a 50-year term option,
(18:53):
which like you said, I mean, ifif it's opposed to renting, of
course, do it, but is it thebest thing for you?
SPEAKER_02 (19:01):
Yeah.
But and no, I and I agree.
But now the federal governmentdon't really have control of
interest rates.
The Federal Reserve doessomewhat on short-term rates.
It's a free market, though.
The bond market buys and sells,and you know that that needs to
remain a free market.
Now, do I think the FederalReserve should be doing more?
(19:23):
Absolutely, but that's kind ofseparate from the federal
government to a point peopledon't realize it's it is
separate, and it's probably agood thing it remains separate.
Yeah, that's right.
But so so the market's gonnadrive itself, and you know, but
it can be influenced, and Ithink it does need to be
influenced a little bit morethan it has.
The other thing, and not to notto take up for the federal
(19:45):
government, because I wouldnever probably do that because
they make so many mistakes, butwhat I am hearing is that this
is the first in incentives thatthe Trump administration is
coming out to try to boosthomeownership.
So I do like that they'rethinking about it and they say
they're coming out with more andmore and more.
So I don't really want to hammeron them too hard until we see
(20:10):
what else they're coming outwith.
I'd like to see more tax creditsfor first-time homebuyers.
I'd love to see more tax creditsfor more, you know, families
having children.
Um, but you know, even evengiving first-time homebuyers,
you know,$10,000 for downpayments, I'd be all for some of
(20:30):
that, you know, because theystill have to have credit and be
responsible to get approved fora mortgage.
So I think there's more thefederal government can do to
your point.
And um, and hopefully they'retelling us the truth.
You know, hopefully this is thefirst of one of the tools in the
toolbox to come out.
SPEAKER_03 (20:48):
Right.
SPEAKER_02 (20:48):
Uh, we'll find out.
And so I'm encouraged by by thatpart.
But man, if this is the only ifthis is the only thing coming
out in the toolbox, it's notgonna be uh very effective
because this is gonna be much todo about nothing.
This 50-year mortgage is gonnabe a big nothing burger.
And um, and so if I said I wasexcited about this, I'd be
(21:13):
lying.
This is just I can't in goodfaith advise people to do this
unless it's this or rent.
And then sure, you know, thatwould be a different thing.
SPEAKER_01 (21:22):
Well, and I think that comes with um you being a
lender who cares and is workingwith individuals and to give the
best as a consultant for themfor their financial future.
SPEAKER_02 (21:36):
Yeah, we have to look out for people, and uh and
I I would never advise somebodyto do something that I wouldn't
myself do.
And I would I can tell you rightnow whether no matter what age I
am, and I'm not gonna revealthat, but uh and you probably
wouldn't want me to, but uh evenif I were you know 20 years old,
(21:56):
I wouldn't be getting a 50-yearmortgage.
SPEAKER_01 (21:58):
No, and I think about Dave Ramsey, you know, he
always talks about the more youborrow, you are a slave to the
lender.
SPEAKER_02 (22:05):
Yeah.
SPEAKER_01 (22:05):
And I can see Dave Ramsey probably on life support
at this point.
SPEAKER_02 (22:09):
Yeah, he had a bad day yesterday, and they say they
say he's in a coma from theshock of hearing that 50-year
mortgage.
So Dave's not happy.
Dave's not happy.
SPEAKER_01 (22:19):
So thank you, Steve, and uh really appreciate that
update for being with us today.
SPEAKER_00 (22:26):
This has been Benchmark Happenings, brought to
you by Jonathan Tipton and SteveReed from Benchmark Home Loans.
Jonathan and Steve areresidential mortgage lenders.
They do home loans in NortheastTennessee, and they're not only
licensed in Tennessee, butFlorida, Georgia, South
Carolina, and Virginia.
We hope you've enjoyed the show.
(22:48):
If you did, make sure to like,rate, and review.
Our passion is NortheastTennessee.
So if you have questions aboutmortgages, call us at 423 491
5405.
And the website iswww.jonathansteve.com.
Thanks for being with us, andwe'll see you next time on
(23:09):
Benchmark Happenings.
This is Benchmark Happening.
Brought to you by Jonathan andSteve from Benchmark Home Loan.
Northeast Tennessee, JohnsonCity, Kingsport, Bristol, the
Tri-City, one of the mostbeautiful places in the country
to live.
Tons of great things to do andawesome local businesses.
(00:22):
And on this show, you'll findout why people are dying to move
to Northeast Tennessee.
And on the way, we'll havediscussions about mortgages and
we'll interview people in thereal estate industry.
It's what we do.
This is Benchmark Happenings,brought to you by Benchmark Home
Loans.
And now your host, ChristineReed.
SPEAKER_01 (00:45):
Welcome back, everyone, to another episode of
Benchmark Happenings.
And the star of our show todayis my handsome husband, Steve
Reed with Benchmark Home Loans.
So welcome, Steve.
SPEAKER_02 (00:57):
Wow, nothing like a little bit of encouragement to
get me started.
So thank you.
Nice to be here.
SPEAKER_01 (01:02):
Well, you know, that is my gift.
I do have the gift ofencouragement.
But you know what?
I I think we have a we'reprobably going to put this
podcast up ahead of a lot ofothers because we have some
breaking news.
The government has reopened andTrump has announced a new plan
um for lending.
(01:22):
So, Steve, um, I wanted you tocome on today and talk about
this new loan amount that'sbeing circulated around.
SPEAKER_02 (01:31):
Well, it's actually the loan term that's being
circulated that's changing, sothe amounts are not, but um so
the loan term is uh talkingabout and circulating, as you
said, 50 years instead of 30years.
So um not an not an entirely newconcept, although um, you know,
(01:53):
we've had 40-year mortgagesbefore, and now they're talking
50, and other countries havetried this, it's failed
miserably, and uh so here weare.
It's the buzz of the day in themortgage industry, is talking
about a a 50-year mortgage andhow we can get more folks in
houses, which I love that part,but we're gonna have to dig into
(02:15):
this a little bit deeper.
SPEAKER_01 (02:17):
I I I like that, and I'm just I know there's gonna be
pros and cons on both sides ofthis new um long term of 50
years.
And uh so Steve, since you'rethe expert in the industry, just
wanted to get your take on that,and you know, what are the right
questions that need to be askedand and what should we be
(02:39):
looking for, and especially as alender and as a a potential home
buyer?
SPEAKER_02 (02:45):
Yeah, so the key is the right questions, and I'm so
glad you mentioned that becauseI'm seeing all these different
framings of how this could work,and is it better to have a
50-year mortgage than nomortgage at all and rent for the
rest of your life?
And you know, but that's reallythe wrong question.
(03:05):
Um, because of course it'sbetter, uh it's better to have a
hundred-year mortgage than torent for the rest of your life.
So that's not really a fairquestion.
I guess it is in some ways, butit's not the question we should
be talking to our clients aboutand the public about.
To me, um, it's it's alwaysbetter to own a home than it is
(03:29):
to to rent something, uh,especially if you're gonna be
there for more than a year ortwo.
You're better off owning basedon appreciation rates and that
kind of thing.
So let's try to.
One thing I'd like to see in theindustry is not comparing a
50-year mortgage to owning ahome.
I think what we have to do is wehave to compare a 50-year
(03:51):
mortgage to a 30-year mortgageor to a 15-year mortgage, and
then make a decision what's thebest to go with.
Now, yes, is it another optionin the tool belt to get more
people in homes?
Um, yeah, I guess so.
I mean, it's and I'm always forgetting more people in houses.
That's what we do, that's how wemake money, that's how people
(04:14):
live the American dream.
So I'm always for that, but I'mnot necessarily for a 50-year
mortgage.
I think 99 times out of ahundred, if I sit down and
explain to my clients, here's a50-year mortgage, here's a
30-year mortgage, here's a 20 or15-year mortgage, I think 99 and
a half times out of 100, they'renot going to go with a 50-year
(04:34):
mortgage, and I would notrecommend that.
So am I saying it's a horriblething?
No, it's not a horrible thing.
It's just, it's really almostnot a thing.
SPEAKER_01 (04:43):
So, so I think, Steve, you said a lot there, and
you know, we all know that homeownership, it builds wealth
because you're building equity,it's stability, it's great for
families, it's it is truly theAmerican dream.
We want people to own homes.
But unpack a 50-year mortgage,what does that look like and
(05:03):
compare it to a 30-yearmortgage?
SPEAKER_02 (05:06):
Okay.
So uh you gave me a little bitof advanced notice, so I did
some numbers, so I can unpackthat.
But let's start with a 50-yearmortgage is 600 months.
A 30-year mortgage is 360months.
SPEAKER_01 (05:22):
So let me ask you a question.
And I just thought of this.
A 50-year mortgage, are theygonna put an age limit of the
person getting the loan on a50-year mortgage?
I mean, like if someone's 80years old, are they gonna be uh
getting a 50-year mortgage?
SPEAKER_02 (05:40):
I mean, yeah, you know what?
That's called optimism.
That's called being optimistic.
Yes.
But they're no, they're notgonna put an age limit.
That's discriminatory, and wecan't do that.
So we do know how old ourclients are because we have to
get a date of birth through theapplication, but that cannot
play into the underwritingprocess.
You can be 90 years old now andget a 30-year mortgage.
(06:03):
You can be a hundred years oldand get a 30-year mortgage.
That can't weigh into it.
SPEAKER_01 (06:07):
Okay.
SPEAKER_02 (06:07):
So so anyway, that that won't be a factor.
But as far as so, do you want tounpack some numbers here?
I would like to.
So what I did, and and I reallydidn't look at sales price as
much as just loan amount, so wecould compare it.
So our median sales price aroundthe Tri-Cities here is in the
(06:28):
300-ish range,$350.
But I just went ahead and did a$400,000 loan amount for
comparison purposes.
So let's say you've got goingrate right now, six and a
quarter on a 30-year fixed, andyou're doing a 30-year loan on a
$400,000 loan amount.
(06:48):
So that now we're not countingproperty taxes or insurance or
anything.
This is just your principal andinterest payment.
So$400,000, 30-year uh fixedrate at six and a quarter.
So you're at about$2,464 permonth.
Okay.
$2,464.
That's for 30 years.
So let's say, man, I'd like todo 50 year because I really
(07:11):
can't afford this house to startwith.
So how much would you guess?
Now I know you know the answerbecause you're looking at my
sheet, but before today, howmuch would you have guessed
going from a 30 year to a 50year would save you on payments
because you're stretching it outanother 20 years?
SPEAKER_01 (07:29):
Well, I would think that, you know, if my 30 year
was a little over 2,000.
SPEAKER_02 (07:34):
2,464.
SPEAKER_01 (07:35):
And if I stretched it out.
Now, me, I'm not a numbersperson, so to me, I would think,
oh my gosh, adding 20 moreyears, that loan amount's gonna
go down by maybe half or or alittle bit.
You mean your payment, I mean.
My payment.
Yeah.
My payment.
SPEAKER_02 (07:52):
Yeah.
So so you would think maybe savea thousand dollars a month or
something, that's what I wouldthink.
Okay.
So there's two factors um herethat's gonna play in.
So number one, if you go from a30 year to a 50 year, you're
gonna probably go up on rateabout a half a percent,
three-eighths to a half, becausethe lender's guaranteeing that
rate for longer, so they're notgonna lock it in to the same
(08:13):
rate as a 30 year.
So instead of six and a quarter,you're probably gonna have six
and three quarters, which is notterrible.
I mean, maybe a half a percentmore on the rate.
You're gonna stretch out thatpayment for another 20 years,
okay, and you are going to savea whopping$134 per month.
Now, how do you like that?
SPEAKER_01 (08:32):
$134.
Well, that's uh some lattes, afew lattes every month.
SPEAKER_02 (08:40):
Exactly.
Why not cut out a pay?
SPEAKER_01 (08:42):
So tell us the the payment.
What was that payment on a30-year and a payment on a
50-year?
SPEAKER_02 (08:48):
$2,464 on a$30, $2,330 on a$50.
So it was$134 a month less on a50-year term.
SPEAKER_01 (08:59):
$134 less.
Steve, do you think that whenpeople break down these numbers
and a lender presents thisinformation to them, do you
think people are going to go fora 50-year?
SPEAKER_02 (09:14):
I would hope not.
SPEAKER_01 (09:15):
You know, I mean to save$134 a month.
SPEAKER_02 (09:18):
I would hope that wouldn't make the difference to
do it.
Um, you want to s you want tohear something even more
shocking?
SPEAKER_01 (09:25):
Yes.
SPEAKER_02 (09:26):
Your 30-year loan, total payback, and I know most
people, uh the argument's gonnabe there, well, most people
don't keep their loan 30 yearsand they don't.
But if you kept the loan toterm, your 30-year loan is gonna
pay back$887,040.
So let's just round that toeight eight hundred and
eighty-seven thousand.
Your 50-year loan, you're gonnapay back$1,398,000.
(09:53):
So you're gonna be paying almost$511,000 more dollars, which is
over half a million in intereston the 50-year versus the 30
year.
So how do you feel about that?
That's is that worth saving$134a month?
SPEAKER_01 (10:09):
No, because I'm thinking if I took that$134 a
month and just invested it,invested that money, I'd still
be better off.
SPEAKER_02 (10:19):
Yeah, yeah.
So, well, let's talk about thata little bit.
So when I look at loans, I andnormally I don't like to look
at, hey, where are you gonna bein 30 years?
Because that's a that's a longtime projection.
Most loans pay off for refinancein about five to seven to a
maximum of 10 years anyway.
So I like to sit down withclients and say, how much equity
(10:42):
are you gonna have in fiveyears?
Because a lot of clients aregrowing families, they're gonna
want to trade up to a biggerhouse or whatever.
So what's really important atthat time is how much um equity
they've got for a down paymenton their next house.
So so I like to look at that.
And so let's let's talk aboutthat and let's use four percent
(11:03):
appreciation and where you'regonna be in in five years.
So not a huge, huge difference,but in five years, now 10 years
is gonna get interesting, but infive years, 4% appreciation, and
based on what your loan will bepaid down to, your 30-year loan,
you're gonna have 106,105, 106,105 in equity.
(11:28):
106,105 dollars in equity on the30-year loan.
On the 50-year loan, you'regonna have 84,643 in equity.
So now here's where the argumentcomes in.
It's still better off to have a50-year mortgage than to be a
renter, right?
Okay.
But that's the wrong question.
(11:50):
Should a f should you have the50-year or the 30-year is the
right question, okay?
So in five years, again,$106,000in equity on your 30-year loan,
$84,643 on your 50-year loan.
So you've lost about$21,000 inequity by doing the 50-year
(12:12):
loan, okay?
So not I mean, it's not gamechanging, but it'd still be nice
to have an extra$20,000 in yourpocket when you go to buy your
next house, right?
SPEAKER_03 (12:21):
Correct.
SPEAKER_02 (12:21):
But let's look at the 10-year difference.
In 10 years on the 30-year loanat 4% appreciation, you're gonna
have just over$303,000 inequity.
The 50-year loan, using 4%appreciation and based on what
your current balance is, you'regonna have$173,000 in equity.
(12:43):
So$173,000 in your pocket versus$303 is a difference of$129,000.
So, and some change, but I'veI've rounded these numbers up,
but you know,$129,000,$130,000more in your pocket in 10 years,
that's huge.
That could be buying your dreamhouse versus I'm just, you know,
(13:03):
kind of checking off a fewboxes, but not all of them.
So to me, the 10-year markswhere it gets really
eye-opening, um, the needle'snot moved as much in five, but
it starts moving even in five,you know, you got just over
20,000, which, you know, is somemoney, but when you get to 129,
130,000 more in equity, that'swhen it's really kind of
(13:26):
eye-opening.
So, you know, what do you do?
So here's here's my solution,okay?
Or one of these solutions.
There's never one solution onesize fits all, but here's one
thing you could consider, andyou've already mentioned this,
Christine, with your astute umknowledge of financial matters
(13:46):
here.
Skip the lattes, okay?
Because you probably save$134 amonth skipping lattes, okay?
Here's another solution.
Instead of buying a$400,000house on a 50-year mortgage,
let's say that$134 makes orbreaks you, and you can't skip
the lattes because you'readdicted to coffee like we are.
SPEAKER_01 (14:07):
Oh, I've got a better one.
SPEAKER_02 (14:09):
What?
Your nails.
Oh, I like that.
SPEAKER_01 (14:12):
So a manicure, pedicure, at best, you're gonna
spend if you do it every twoweeks, eighty to a hundred
dollars with tip.
Yeah.
SPEAKER_03 (14:23):
Okay.
SPEAKER_01 (14:24):
And most people get their nails done every two
weeks.
So if you just do nails, fortybucks a pop, ten dollar tip.
So that's one hundred dollars amonth if you're just doing your
nails twice a week.
SPEAKER_02 (14:36):
Okay, but what if you're a a single male buying
this house?
And that's not an option.
SPEAKER_01 (14:42):
I don't know what it sounds like.
SPEAKER_02 (14:44):
Um Okay, so but that's a great that's a great if
that's good for couples or for asingle female, but let's but um
so here's my uh summary on thisor my idea.
Instead of buying the$400,000house, you gotta save, let's
just keep in mind you gotta savethe$134.
It's a make or break.
(15:04):
You gotta do it.
Go to the$380,000 30-year loan,and it's almost the same payment
is the$400,000 50-year loanpayment.
You save about, you know,$144 amonth by going down$20 or$20,000
(15:24):
on price.
Okay, so just go down or save up$20,000.
SPEAKER_03 (15:28):
Right.
SPEAKER_02 (15:29):
Save up$20,000 more and do the 30-year loan, go down
$20,000 in price.
Don't get your nails, don't doyour manny petty, don't buy your
I mean, so there's a lot of waysto not do a 50-year loan.
And that's what we're kind oftalking about here, right?
How can we avoid a 50-year loan?
Which I would want to at allcost unless it was versus
(15:51):
renting.
Now, if I'm looking at it versusrenting and I got to save that
134, heck yeah, I'm doing a50-year mortgage, okay?
So that's probably gonna be lessthan 1% of the time.
But let's look at alternativeson how we could put you in a
better financial position by nothaving to do the 50-year loan.
Again, I'm not saying it's aterrible thing, but I am saying
(16:13):
ask the right questions, makesure, you know, make sure you're
looking at everything correctly.
Now, let's let's take one morecomparison out there and we'll
we'll kind of stop with thecomparisons.
But um let's say you do the50-year loan and 400,000 and you
got whatever equity you've gotin 10 years, what do we say you
(16:33):
would have?
173,000?
SPEAKER_01 (16:35):
Yeah, 173K.
SPEAKER_02 (16:37):
If you did 380 and did the 30-year loan, the unit
and so you're paying this isapples to apples because you're
paying about the same payment,right?
Okay.
The payment on 30, on 30 yearsfor 380 is about the same as 50
years at 400, right?
But you've kind of, you know,you've backed off.
You haven't done your 50-yearmortgage, you've done 30 and
(16:59):
you've done 20,000 less.
Guess what?
What?
You've got 40,000 more in equityon the 380 house than you did
the 400 on a 50-year mortgage.
SPEAKER_01 (17:11):
Is that in five years?
SPEAKER_02 (17:12):
That's in 10 years.
So you've just put 40 morethousand in your pocket for the
same amount of monthly payment.
Same amount of monthly payment,and you've put 40,000 more in
your pocket.
So what's the smartest way togo?
Of course, it's to do the30-year loan.
So, um, but I don't want peopleout there to be throwing rocks
(17:34):
at me saying, well, you you saidthere's no use for a 50-year
loan.
No, I'm still for a 50-yearoverrenting.
Okay.
Sure.
Let's get the the bottom line.
But I'm not over, I mean, uh the50 year will be hard to make me
decide to do that over a 30-yearloan unless someone just don't
qualify.
SPEAKER_01 (17:53):
Well, and a lot of times, you know, negotiating
your price of a home with ahomeowner, you know, if if you
have a great realtor, you know,they can help you negotiate that
cost down, you know, and get youto that 380.
SPEAKER_02 (18:06):
Great point.
Absolutely.
SPEAKER_01 (18:08):
You know, so that that's an important thing, you
know, know your realtor, makesure your realtor can negotiate
for you, that they're in your inyour court.
And I'll I'll just say this,Steve.
I really think that the federalgovernment, they're really not
addressing the issue.
They've come out with a 50-yearterm for a home loan.
(18:31):
Why in the world can they notwork on reducing the interest
rate?
But it's almost like it's aswitch and bait.
It's like instead of working toreduce that interest rate, which
we all need a reduced interestrate, that would drive home
ownership more, people thatwould drive the housing market
more, but instead now they comeout with a 50-year term option,
(18:53):
which like you said, I mean, ifif it's opposed to renting, of
course, do it, but is it thebest thing for you?
SPEAKER_02 (19:01):
Yeah.
But and no, I and I agree.
But now the federal governmentdon't really have control of
interest rates.
The Federal Reserve doessomewhat on short-term rates.
It's a free market, though.
The bond market buys and sells,and you know that that needs to
remain a free market.
Now, do I think the FederalReserve should be doing more?
(19:23):
Absolutely, but that's kind ofseparate from the federal
government to a point peopledon't realize it's it is
separate, and it's probably agood thing it remains separate.
Yeah, that's right.
But so so the market's gonnadrive itself, and you know, but
it can be influenced, and Ithink it does need to be
influenced a little bit morethan it has.
The other thing, and not to notto take up for the federal
(19:45):
government, because I wouldnever probably do that because
they make so many mistakes, butwhat I am hearing is that this
is the first in incentives thatthe Trump administration is
coming out to try to boosthomeownership.
So I do like that they'rethinking about it and they say
they're coming out with more andmore and more.
So I don't really want to hammeron them too hard until we see
(20:10):
what else they're coming outwith.
I'd like to see more tax creditsfor first-time homebuyers.
I'd love to see more tax creditsfor more, you know, families
having children.
Um, but you know, even evengiving first-time homebuyers,
you know,$10,000 for downpayments, I'd be all for some of
(20:30):
that, you know, because theystill have to have credit and be
responsible to get approved fora mortgage.
So I think there's more thefederal government can do to
your point.
And um, and hopefully they'retelling us the truth.
You know, hopefully this is thefirst of one of the tools in the
toolbox to come out.
SPEAKER_03 (20:48):
Right.
SPEAKER_02 (20:48):
Uh, we'll find out.
And so I'm encouraged by by thatpart.
But man, if this is the only ifthis is the only thing coming
out in the toolbox, it's notgonna be uh very effective
because this is gonna be much todo about nothing.
This 50-year mortgage is gonnabe a big nothing burger.
And um, and so if I said I wasexcited about this, I'd be
(21:13):
lying.
This is just I can't in goodfaith advise people to do this
unless it's this or rent.
And then sure, you know, thatwould be a different thing.
SPEAKER_01 (21:22):
Well, and I think that comes with um you being a
lender who cares and is workingwith individuals and to give the
best as a consultant for themfor their financial future.
SPEAKER_02 (21:36):
Yeah, we have to look out for people, and uh and
I I would never advise somebodyto do something that I wouldn't
myself do.
And I would I can tell you rightnow whether no matter what age I
am, and I'm not gonna revealthat, but uh and you probably
wouldn't want me to, but uh evenif I were you know 20 years old,
(21:56):
I wouldn't be getting a 50-yearmortgage.
SPEAKER_01 (21:58):
No, and I think about Dave Ramsey, you know, he
always talks about the more youborrow, you are a slave to the
lender.
SPEAKER_02 (22:05):
Yeah.
SPEAKER_01 (22:05):
And I can see Dave Ramsey probably on life support
at this point.
SPEAKER_02 (22:09):
Yeah, he had a bad day yesterday, and they say they
say he's in a coma from theshock of hearing that 50-year
mortgage.
So Dave's not happy.
Dave's not happy.
SPEAKER_01 (22:19):
So thank you, Steve, and uh really appreciate that
update for being with us today.
SPEAKER_00 (22:26):
This has been Benchmark Happenings, brought to
you by Jonathan Tipton and SteveReed from Benchmark Home Loans.
Jonathan and Steve areresidential mortgage lenders.
They do home loans in NortheastTennessee, and they're not only
licensed in Tennessee, butFlorida, Georgia, South
Carolina, and Virginia.
We hope you've enjoyed the show.
(22:48):
If you did, make sure to like,rate, and review.
Our passion is NortheastTennessee.
So if you have questions aboutmortgages, call us at 423 491
5405.
And the website iswww.jonathansteve.com.
Thanks for being with us, andwe'll see you next time on
(23:09):
Benchmark Happenings.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Bobby Bones Show
Listen to 'The Bobby Bones Show' by downloading the daily full replay.