Trump’s 50-Year Mortgage Plan Could Reshape Homebuying in 2020
The Trump administration is exploring a 50-year mortgage plan, which could significantly impact the housing market. The Department of the Treasury is developing this long-term loan program, expected to be introduced in 2020.
The 50-year mortgage aims to lower monthly payments for homebuyers, increasing their purchasing power. For instance, a buyer with a $400,000 home and a $360,000 loan at 6.25% could save about $250 a month with a 50-year term. However, total interest would nearly double compared to a 30-year term.
The median home price in the Twin Cities metro area is $390,000, up 2.6% from last year. Higher mortgage rates and tight inventory have been limiting home sales this year. The Minnesota Realtors association welcomes the potential of more options for buyers, which could boost activity and benefit sellers in the fourth quarter.
The 50-year mortgage could be an attractive option for first-time homebuyers or those seeking greater cash flow. However, it's crucial to consider the long-term implications, such as slower equity development due to interest building over time.
