You’ve likely seen headlines about a 50-year mortgage program that could make homebuying more affordable — and may be wondering if you should wait and see what happens. Here’s why that may not be the best strategy.
When you stretch a loan over a longer term, the interest rate increases. We see this with 30-year loans versus 15-year loans, and a 50-year loan would follow suit. On a $1,000,000 loan, a 30-year fixed payment is about$6,157,while we estimate a 50-year loan payment of about$5,826— saving roughly $330 per month. Helpful, but not enough to truly change affordability.
What will make a bigger impact is a Fed rate reduction. Lowering the Fed rate would bring down the cost of housing, which is a key ingredient in inflation. Now that the government is projected to reopen, new economic data will start coming in, guiding the Fed’s next move in December and offering much-needed clarity for both buyers and the market.
In the meantime, it’s still an excellent window for all buyers, especially first-time homebuyers. Interest rates remain at their lowest levels in a year, sellers are motivated, and the recent increase in inventory offers a great opportunity before spring competition heats up.
Don’t sit on the sidelines waiting for a 50-year mortgage or the Fed’s next move. We can show you how you can afford to purchase now.
