Mortgage of a lifetime

One of my favorite moments of any wedding ceremony is the moment where all married couples in the crowd get on the dance floor and slow dance as the DJ slowly removes couples from most recently married to married the longest. I find it strikingly beautiful to see a couple married 50 plus years still in love and grinning ear-to-ear. All of the life experiences, all the moments that would take thousands of pages to write, the highs and the lows.

So often at the center of that marriage is a home. A place where kids grow up, where thousands of cups of coffee are made, where roofs leak and meals are made. A place of rest and of growing up.

And now, you may qualify for a mortgage that will outlive you.

The 50 year mortgage — Why?

Housing prices have gotten out of hand, and the youngest generations are feeling that they cannot participate in the American promise.

The contract given to all Americans was that if you work hard and go to school you will be able to get a good job and buy a home and raise some kids and retire one day.

That contract is broken. Young Americans feel so distanced from that felt promise that they are turning against capitalism itself, freely electing a socialist to run the city at the heart of capitalism. It is symbolic as much as it is reality.

President Trump and his federal friends are seeking to curb the rising discontent before the riptide pulls our country into chaos. One solution, it seems, is to get the young folks into their own home. When they own a home, they will become invested in the current system. When people are invested, they don’t revolt.

The benefits

The idea behind the 50 year is that it will drop monthly payments an allow people to qualify for a more expensive home. House prices have seemed pretty sticky and out of reach for young people. This would allow them to loan a home without the housing market needing to crash like its 2008.

Plus, if inflation continues forever, then wages should also go up forever. So, a mortgage payment that feels expensive today should look like peanuts in 2075 (which is when you’d be making your final payments, along with searching for which nursing home to move into).

Say that the FED needs to raise interest rates. You will also be safe from higher rates, locked into a rate forever. In fact, they also have floated the idea of a “traveling mortgage” so that you can keep your rate even if you move homes.

The drawbacks

The debt is insane. The way the math works, a 50 year mortgage forces you to pay nearly double that of the 30 year. It will take forever for you to build equity. Who is going to refinance you into another 50 year mortgage, chances are the loan will outlive you.

Perhaps the biggest is the lost opportunity. All the money tied up into a house that was bigger than you could afford is now causing you to miss out on key years of compounding growth investing in the market. Your only asset at 80 is going to be your house. You will never retire until they take your home and you become a ward of the state.

The good news is that there is a ton of investment in allowing us to live longer, with estimates that humans will start extending their lifespan up to 150 years. So maybe that 50 year loan isn’t all that bad?

Debt versus affordability

Just because I can take out a loan to buy a house doesn’t mean that it is affordable. We need initiatives that make housing more affordable, not longer mortgages.

Debt is slavery. We need to stop telling the younger generations that it is anything but that. We are creating a system where the rich are going to own the lives of everyone.

We are on the road to serfdom, if we are not already there.

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