Is President Trump’s proposed 50-year mortgage right for you? Experts weigh the pros and cons

Housing costs continue to be a big stumbling block for many, especially in California. President Donald Trump has proposed a possible solution as a way to encourage young people to buy real estate: 50-year mortgages.

ABC7 On Your Side spoke with experts to examine the pros and cons.

Anyone looking to buy a home in California has been hit with sticker shock. It’s out of reach for many, which is why the president is pitching a 50-year mortgage.

“It’s certainly an intriguing concept. It might help some buyers who are struggling with affordability to get into the market, but really, the monthly savings aren’t enough that this is going to become a hugely popular product,” said Bankrate writer and housing market analyst Jeff Ostrowski.

Experts are skeptical about the idea, in large part because the savings just aren’t that great.

Bankrate crunched the numbers: compared to a 30-year mortgage on a $400,000 loan, it only worked out to about $56 in savings per month. But there may be cases where a 50-year mortgage does make sense.

“Say I really do need to save that $56 a month and that’s the difference between me becoming a homeowner and staying a renter, then yeah, I’d say go ahead and take the 50-year loan. In a couple of years, hopefully your situation has improved, you’ve got some equity in the house, you’ve got some more income, and you can refinance into a 30-year loan or even a shorter term if you prefer,” Ostrowski said.

It’s important to keep in mind that building equity in your home will be a slow process. Most of your payments with a 50-year mortgage would go toward paying interest on the loan.

If you’re waiting for the Federal Reserve to cut interest rates, remember that mortgage rates don’t always follow the Federal Reserve. The last time the Federal Reserve cut, mortgage rates actually went up.