November 11, 2025 • 8 mins
Stephen Kates of Bankrate says that isn't a good idea because you are not building any equity. He also takes a look at inflation and car loans
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Something else that caught my eye, and it's interesting, is
this whole notion Trump administration floated the idea of a
fifty year mortgage. Let's get more now on the Legacy
Retirement Group dot com phone line. Stephen Kate's financial analyst
with bankrate dot com. Stephen, good morning, see fifty year
mortgages on the table. I don't know if this makes
(00:22):
I mean, banks probably love this one, don't they.
Speaker 2 (00:25):
Banks would love this, I mean fifty years of interest. Now, granted,
most people probably no one will actually carry a mortgage
that long. Rarely to people even carry thirty your mortgages
that long. But what they're getting is payments for any
number of years that are majority all interest, and that's
gonna be great for them.
Speaker 1 (00:45):
Yeah, if you're a young you know, first time home buyer,
say you're thirty years old, if you carry that that
mortgage out to term, I mean you'll be eighty years
old when you finally pay that off. And you know,
looking at some just rough numbers, steven, assuming the interest
rate it's the same for a thirty and a fifty,
which it wouldn't be. But assuming for argument's sake, the
fifty year loan interest payments alone would be about double
(01:09):
then what a thirty year loan mortgage interest would be.
Speaker 2 (01:13):
Yeah, I mean I think it's actually even even more
than that. What you get for savings in terms of
the payment is relatively paltry. You know, the payment difference
between a fifty year and a thirty year it's only
about eleven percent lower. Wow.
Speaker 1 (01:29):
But okay, So, but to your point, if you're someone
who's buying a house and you have no intention of
living in that home for thirty or fifty years, as
most people don't, could it make sense for somebody if
you needed to save a couple of bucks up front,
If you save you know, two three four hundred bucks
a month, and you your your grand master plan is
(01:50):
to live in that house for five, six, seven, ten years,
could that be beneficial to you?
Speaker 2 (01:56):
Yeah? I think possibly. You know, ultimately of putting, you're
building such little equity in the home. It's kind of
almost hard to distinguish it from renting in a way. Now,
granted you're getting a flat payment in terms of the
principle and interest, but you're still going to have maintenance costs,
You're still going to have insurance costs, you know, all
property taxes, so those costs can certainly go up, and
(02:21):
you don't really build much equity. So if you sell
that home after say, you know, five, seven, ten years,
you may get the appreciation of the home you know
back in your pocket, but you have not paid down
the principle of that loan too much. I looked at
how much equity you would have acquired over let's say
the first thirty years of a fifty year loan, just
(02:44):
to line that up against a thirty year mortgage, and
at thirty of your mortgage you'd have the whole loan
paid off after thirty years. You would have less than
a quarter of the loan paid off after thirty years
of a fifty year loan, because you're paying so much
interest on all of those early payments.
Speaker 1 (03:01):
Speaking with Stephen Kates bangreat dot com talking about the
the idea of a fifty year mortgage, So, you know,
why would this be even proposed? You know, people start
crunching the numbers, they realize this doesn't make sense.
Speaker 2 (03:14):
What's behind this? Well, I think that it's the cost
of homes and just the unaffordability of trying to get
into properties. You know, I think it's great to see
that we're exploring some options, you know, to try to
make it easier for people to get into homes. But
you know, this type of a product, it doesn't do enough.
(03:35):
I mean, there's really no replacement for just having more
homes available for people to try to buy. That's really
the thing that we need. And you know, there's no
easy there's no easy way to construct millions of homes
across the country, which is essentially what we really need,
and that isn't popular in a lot of areas like
California in the Northeast, where regulations are tighter and people
(03:58):
don't want to you know, kind of give a break
on their own home values. So you know, this is something,
but I'm not sure if it's really to answer the question.
Speaker 1 (04:08):
I saw a story the other day that adjustable rate
our mortgages are kind of trendy right now, Steven, that
people are jumping in maybe getting a lower interest rate.
But you know, after if it's a five year army,
you know, all bets are off of what the interest
rates are going to look like in five years. But
is that an option today for home buyers if you
want a lower rate, to maybe do an adjustable rate mortgage.
(04:31):
Those are kind of trendy again.
Speaker 2 (04:33):
Those are coming back around, and I think people are
looking to those to get a lower rate. You know,
they're also banking on the idea that we're expecting rates
to be coming down. We just don't know over exactly
what time period they're going to start to move, so
those are becoming more popular. I think that some of
the memory of the two thousand and eight crisis has
(04:53):
kept people up until now from getting into the adjustble
rate mortgages because those were a huge, huge source of
the problems that we had back then, and I think
more people are getting into those. Banks are mostly offering
adjustable rate mortgages to wealthier, more financially capable households because
they're feeling like they're at a less risk for default,
(05:15):
which was what we had in two thousand and eight.
I mean, we had just defaults, just widespread, and adjustable
rates we're a tremendous problem then. So that's an option
if you can really apply and be eligible for that.
I would say the best thing that people can do
if they're looking for a home or even thinking about
looking for a home or a refinance, is get your
(05:37):
credit score as good as possible. Improving that today is
going to be one of the best ways that you
can be eligible for those lower cost mortgages, whether it's
going to be a traditional mortgage, whether it's going to
be an adjustable rate. You're improving your credit score, improving
your financial standing is going to make you eligible for
better rates and put you in a position where you
can afford lower payments and you can hopefully get into
(05:59):
that house one.
Speaker 1 (06:00):
Steven, do you think indistrates are going to come down?
I mean, we know we've got a FED meeting next month,
but you know, in the next two, three, four years,
your overall and I'm asking a look in your crystal ball,
and there's a lot of fagers, a lot of things
that can happen between now and then, but overall we're sitting,
you know, mid to low sixes. You think we could
dip below six in the next couple of years.
Speaker 2 (06:20):
In the next couple of years, I do think we'll
get below six. Are we going to get back to
the fours or the threes? I don't think so. I
think that we're probably going to settle in probably in
the low fives. I think that's more of a normal
place for mortgage rates, and ultimately the really ultra low
rates that we had in the twos and the threes,
(06:41):
you know, the low fours, that was a bit of
an aberration, you know, from from the last ten years
or so, and I'm not sure if we're going to
get back there.
Speaker 1 (06:49):
What about auto loans, I mean, we talk about a
fifty year mortgage. I mean I remember being you know,
sort of laughing and shocked when you heard that you
could get a new car at a you know, a
seventy two month loan or an eight eighty four month loans.
That's a seven year car loan. Again, at the same
basic principles apply there. You're just you're paying so much
in interest there. What about car loans, Well.
Speaker 2 (07:11):
Yeah, I mean it's the same problem, and car loans
in a way are even worse. You can expect that
a home, certainly, if you take care of it, can
appreciate value. With a car, you know, that's going to appreciate.
So if you're taking on a seven or eight year
loan on an asset that's going to lose value, you're
certainly going to get underwater by the end of that loan.
(07:33):
And we've seen that trade ins are are rising in
terms of the amount that are coming in underwater, So
people are i think at almost a rate of one
to four they're making your trade ins underwater, and that's
been rising in the last few years. It's not necessarily
anything to be concerned about from an economic standpoint, but
(07:55):
it just demonstrates the amount of cars that are taking
on those longer loans that are depreciating and are out
hoolding your value relative to the balance of alone. Uh,
And that's something that people should should really avoid. Ultimately,
you're if you never stop paying for your car until
you get the next one, you're you're never really off
that treadmill. And that's that's a problem for most people's finances.
Something else that caught my eye, and it's interesting, is
this whole notion Trump administration floated the idea of a
fifty year mortgage. Let's get more now on the Legacy
Retirement Group dot com phone line. Stephen Kate's financial analyst
with bankrate dot com. Stephen, good morning, see fifty year
mortgages on the table. I don't know if this makes
(00:22):
I mean, banks probably love this one, don't they.
Speaker 2 (00:25):
Banks would love this, I mean fifty years of interest. Now, granted,
most people probably no one will actually carry a mortgage
that long. Rarely to people even carry thirty your mortgages
that long. But what they're getting is payments for any
number of years that are majority all interest, and that's
gonna be great for them.
Speaker 1 (00:45):
Yeah, if you're a young you know, first time home buyer,
say you're thirty years old, if you carry that that
mortgage out to term, I mean you'll be eighty years
old when you finally pay that off. And you know,
looking at some just rough numbers, steven, assuming the interest
rate it's the same for a thirty and a fifty,
which it wouldn't be. But assuming for argument's sake, the
fifty year loan interest payments alone would be about double
(01:09):
then what a thirty year loan mortgage interest would be.
Speaker 2 (01:13):
Yeah, I mean I think it's actually even even more
than that. What you get for savings in terms of
the payment is relatively paltry. You know, the payment difference
between a fifty year and a thirty year it's only
about eleven percent lower. Wow.
Speaker 1 (01:29):
But okay, So, but to your point, if you're someone
who's buying a house and you have no intention of
living in that home for thirty or fifty years, as
most people don't, could it make sense for somebody if
you needed to save a couple of bucks up front,
If you save you know, two three four hundred bucks
a month, and you your your grand master plan is
(01:50):
to live in that house for five, six, seven, ten years,
could that be beneficial to you?
Speaker 2 (01:56):
Yeah? I think possibly. You know, ultimately of putting, you're
building such little equity in the home. It's kind of
almost hard to distinguish it from renting in a way. Now,
granted you're getting a flat payment in terms of the
principle and interest, but you're still going to have maintenance costs,
You're still going to have insurance costs, you know, all
property taxes, so those costs can certainly go up, and
(02:21):
you don't really build much equity. So if you sell
that home after say, you know, five, seven, ten years,
you may get the appreciation of the home you know
back in your pocket, but you have not paid down
the principle of that loan too much. I looked at
how much equity you would have acquired over let's say
the first thirty years of a fifty year loan, just
(02:44):
to line that up against a thirty year mortgage, and
at thirty of your mortgage you'd have the whole loan
paid off after thirty years. You would have less than
a quarter of the loan paid off after thirty years
of a fifty year loan, because you're paying so much
interest on all of those early payments.
Speaker 1 (03:01):
Speaking with Stephen Kates bangreat dot com talking about the
the idea of a fifty year mortgage, So, you know,
why would this be even proposed? You know, people start
crunching the numbers, they realize this doesn't make sense.
Speaker 2 (03:14):
What's behind this? Well, I think that it's the cost
of homes and just the unaffordability of trying to get
into properties. You know, I think it's great to see
that we're exploring some options, you know, to try to
make it easier for people to get into homes. But
you know, this type of a product, it doesn't do enough.
(03:35):
I mean, there's really no replacement for just having more
homes available for people to try to buy. That's really
the thing that we need. And you know, there's no
easy there's no easy way to construct millions of homes
across the country, which is essentially what we really need,
and that isn't popular in a lot of areas like
California in the Northeast, where regulations are tighter and people
(03:58):
don't want to you know, kind of give a break
on their own home values. So you know, this is something,
but I'm not sure if it's really to answer the question.
Speaker 1 (04:08):
I saw a story the other day that adjustable rate
our mortgages are kind of trendy right now, Steven, that
people are jumping in maybe getting a lower interest rate.
But you know, after if it's a five year army,
you know, all bets are off of what the interest
rates are going to look like in five years. But
is that an option today for home buyers if you
want a lower rate, to maybe do an adjustable rate mortgage.
(04:31):
Those are kind of trendy again.
Speaker 2 (04:33):
Those are coming back around, and I think people are
looking to those to get a lower rate. You know,
they're also banking on the idea that we're expecting rates
to be coming down. We just don't know over exactly
what time period they're going to start to move, so
those are becoming more popular. I think that some of
the memory of the two thousand and eight crisis has
(04:53):
kept people up until now from getting into the adjustble
rate mortgages because those were a huge, huge source of
the problems that we had back then, and I think
more people are getting into those. Banks are mostly offering
adjustable rate mortgages to wealthier, more financially capable households because
they're feeling like they're at a less risk for default,
(05:15):
which was what we had in two thousand and eight.
I mean, we had just defaults, just widespread, and adjustable
rates we're a tremendous problem then. So that's an option
if you can really apply and be eligible for that.
I would say the best thing that people can do
if they're looking for a home or even thinking about
looking for a home or a refinance, is get your
(05:37):
credit score as good as possible. Improving that today is
going to be one of the best ways that you
can be eligible for those lower cost mortgages, whether it's
going to be a traditional mortgage, whether it's going to
be an adjustable rate. You're improving your credit score, improving
your financial standing is going to make you eligible for
better rates and put you in a position where you
can afford lower payments and you can hopefully get into
(05:59):
that house one.
Speaker 1 (06:00):
Steven, do you think indistrates are going to come down?
I mean, we know we've got a FED meeting next month,
but you know, in the next two, three, four years,
your overall and I'm asking a look in your crystal ball,
and there's a lot of fagers, a lot of things
that can happen between now and then, but overall we're sitting,
you know, mid to low sixes. You think we could
dip below six in the next couple of years.
Speaker 2 (06:20):
In the next couple of years, I do think we'll
get below six. Are we going to get back to
the fours or the threes? I don't think so. I
think that we're probably going to settle in probably in
the low fives. I think that's more of a normal
place for mortgage rates, and ultimately the really ultra low
rates that we had in the twos and the threes,
(06:41):
you know, the low fours, that was a bit of
an aberration, you know, from from the last ten years
or so, and I'm not sure if we're going to
get back there.
Speaker 1 (06:49):
What about auto loans, I mean, we talk about a
fifty year mortgage. I mean I remember being you know,
sort of laughing and shocked when you heard that you
could get a new car at a you know, a
seventy two month loan or an eight eighty four month loans.
That's a seven year car loan. Again, at the same
basic principles apply there. You're just you're paying so much
in interest there. What about car loans, Well.
Speaker 2 (07:11):
Yeah, I mean it's the same problem, and car loans
in a way are even worse. You can expect that
a home, certainly, if you take care of it, can
appreciate value. With a car, you know, that's going to appreciate.
So if you're taking on a seven or eight year
loan on an asset that's going to lose value, you're
certainly going to get underwater by the end of that loan.
(07:33):
And we've seen that trade ins are are rising in
terms of the amount that are coming in underwater, So
people are i think at almost a rate of one
to four they're making your trade ins underwater, and that's
been rising in the last few years. It's not necessarily
anything to be concerned about from an economic standpoint, but
(07:55):
it just demonstrates the amount of cars that are taking
on those longer loans that are depreciating and are out
hoolding your value relative to the balance of alone. Uh,
And that's something that people should should really avoid. Ultimately,
you're if you never stop paying for your car until
you get the next one, you're you're never really off
that treadmill. And that's that's a problem for most people's finances.
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
Are You A Charlotte?
In 1997, actress Kristin Davis’ life was forever changed when she took on the role of Charlotte York in Sex and the City. As we watched Carrie, Samantha, Miranda and Charlotte navigate relationships in NYC, the show helped push once unacceptable conversation topics out of the shadows and altered the narrative around women and sex. We all saw ourselves in them as they searched for fulfillment in life, sex and friendships. Now, Kristin Davis wants to connect with you, the fans, and share untold stories and all the behind the scenes. Together, with Kristin and special guests, what will begin with Sex and the City will evolve into talks about themes that are still so relevant today. "Are you a Charlotte?" is much more than just rewatching this beloved show, it brings the past and the present together as we talk with heart, humor and of course some optimism.
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.