Are 50-Year Mortgages a Good Idea? What Homebuyers Need to Know

I'm totally in agreement with Kevin O'Leary's hard stance against 50-year mortgages.   Here's what he said...

"They are a bad financial move that will lead to homeowners never owning their homes." He argues that while monthly payments might decrease, the enormous amount of interest paid over 50 years would be a "lifetime sentence" and not a sound way to build wealth. O'Leary also notes that a 50-year mortgage would be a poor alternative to refinancing a 30-year mortgage, as the longer term would likely result in higher interest rates. 

Key points from Kevin O'Leary

• Homeownership is not guaranteed: He believes homeowners will die before the mortgage is paid off, and will effectively be renting for life because so much of the payment goes to interest.
• Interest payments are excessive: Over 50 years, the total interest paid would skyrocket compared to a 30-year mortgage, making it a poor investment.
• Interest rates could be higher: The 50-year loan would likely have a higher interest rate, meaning very little savings on monthly payments despite the longer term.
• Bad policy: O'Leary views the proposal as "bad policy" that avoids the real issues of housing affordability by simply pushing the problem into the future. 

This plan suggested by President Trump will likely never occur, but our advice is to look for a good long-term real estate purchase that can be paid off in 30 years.

There are mortgages with a 7-year fixed rate that also could be a reasonable decision to make the home more affordable today, or if you can pay a bit more each month, consider the 15-year mortgage, which typically has slightly lower rates.