Why A 50-Year Mortgage Saves Pennies Now But Costs A Fortune Later

A 50-year mortgage sounds like the shortcut to affordability, but does it really help—or just push the bill into the future? We put the buzz to the test with clear numbers on payments, total interest, and equity growth, then map out practical alternatives that preserve your budget and your long-term wealth. Using a $400,000 example at current rates, we show why the monthly savings from 50 years is surprisingly small while the lifetime interest cost mushrooms by more than half a million dollars. From five-year to ten-year equity milestones, the story sharpens: a standard 30-year term builds significantly more wealth, faster.

We also explore smarter ways to keep payments in check without adding two decades of debt. Right-size the purchase price, negotiate with a capable agent, and consider saving a bit longer to strengthen your position—all moves that can match the 50-year payment while protecting your equity. Along the way, we talk about what actually drives mortgage rates, why markets matter more than politics, and which policy ideas could help first-time buyers without saddling them with steep interest bills.

Whether you’re weighing rent versus buy or debating between a 30-year and a 50-year term, the goal is the same: own smarter, not longer. If the choice is half a century of payments or a small adjustment in price, the math points to a clear winner. Subscribe for more straight-talk breakdowns, share this with a friend who’s house hunting, and leave a quick review to tell us where you stand on ultra-long mortgages.

To help you to navigate the home buying and mortgage process, Jonathan & Steve are currently licensed in Tennessee, Florida, Georgia, South Carolina, and Virginia, contact us today at 423-491-5405 or visit www.jonathanandsteve.com.

Chapters

• 0:00 Welcome And Local Market Context
• 1:15 Breaking News: 50-Year Mortgage Buzz
• 2:30 Framing The Right Question
• 4:40 Payment Math: 30-Year Vs 50-Year
• 8:20 Total Interest And Equity Over Time
• 12:20 Smarter Alternatives To 50 Years
• 17:30 Policy, Rates, And First-Time Buyer Ideas
• 21:00 Final Takeaways And Lender Advice
• 22:30 Credits And How To Connect

Transcript

SPEAKER_00: 0:01

This is Benchmark Happening. Brought to you by Jonathan and Steve from Benchmark Home Loan. Northeast Tennessee, Johnson City, Kingsport, Bristol, the Tri-City, one of the most beautiful places in the country to live. Tons of great things to do and awesome local businesses. And on this show, you'll find out why people are dying to move to Northeast Tennessee. And on the way, we'll have discussions about mortgages and we'll interview people in the real estate industry. It's what we do. This is Benchmark Happenings, brought to you by Benchmark Home Loans. And now your host, Christine Reed.

SPEAKER_01: 0:45

Welcome back, everyone, to another episode of Benchmark Happenings. And the star of our show today is my handsome husband, Steve Reed with Benchmark Home Loans. So welcome, Steve.

SPEAKER_02: 0:57

Wow, nothing like a little bit of encouragement to get me started. So thank you. Nice to be here.

SPEAKER_01: 1:02

Well, you know, that is my gift. I do have the gift of encouragement. But you know what? I I think we have a we're probably going to put this podcast up ahead of a lot of others because we have some breaking news. The government has reopened and Trump has announced a new plan um for lending. So, Steve, um, I wanted you to come on today and talk about this new loan amount that's being circulated around.

SPEAKER_02: 1:31

Well, it's actually the loan term that's being circulated that's changing, so the amounts are not, but um so the loan term is uh talking about and circulating, as you said, 50 years instead of 30 years. So um not an not an entirely new concept, although um, you know, we've had 40-year mortgages before, and now they're talking 50, and other countries have tried this, it's failed miserably, and uh so here we are. It's the buzz of the day in the mortgage industry, is talking about a a 50-year mortgage and how we can get more folks in houses, which I love that part, but we're gonna have to dig into this a little bit deeper.

SPEAKER_01: 2:17

I I I like that, and I'm just I know there's gonna be pros and cons on both sides of this new um long term of 50 years. And uh so Steve, since you're the expert in the industry, just wanted to get your take on that, and you know, what are the right questions that need to be asked and and what should we be looking for, and especially as a lender and as a a potential home buyer?

SPEAKER_02: 2:45

Yeah, so the key is the right questions, and I'm so glad you mentioned that because I'm seeing all these different framings of how this could work, and is it better to have a 50-year mortgage than no mortgage at all and rent for the rest of your life? And you know, but that's really the wrong question. Um, because of course it's better, uh it's better to have a hundred-year mortgage than to rent for the rest of your life. So that's not really a fair question. I guess it is in some ways, but it's not the question we should be talking to our clients about and the public about. To me, um, it's it's always better to own a home than it is to to rent something, uh, especially if you're gonna be there for more than a year or two. You're better off owning based on appreciation rates and that kind of thing. So let's try to. One thing I'd like to see in the industry is not comparing a 50-year mortgage to owning a home. I think what we have to do is we have to compare a 50-year mortgage to a 30-year mortgage or to a 15-year mortgage, and then make a decision what's the best to go with. Now, yes, is it another option in the tool belt to get more people in homes? Um, yeah, I guess so. I mean, it's and I'm always for getting more people in houses. That's what we do, that's how we make money, that's how people live the American dream. So I'm always for that, but I'm not necessarily for a 50-year mortgage. I think 99 times out of a hundred, if I sit down and explain to my clients, here's a 50-year mortgage, here's a 30-year mortgage, here's a 20 or 15-year mortgage, I think 99 and a half times out of 100, they're not going to go with a 50-year mortgage, and I would not recommend that. So am I saying it's a horrible thing? No, it's not a horrible thing. It's just, it's really almost not a thing.

SPEAKER_01: 4:43

So, so I think, Steve, you said a lot there, and you know, we all know that home ownership, it builds wealth because you're building equity, it's stability, it's great for families, it's it is truly the American dream. We want people to own homes. But unpack a 50-year mortgage, what does that look like and compare it to a 30-year mortgage?

SPEAKER_02: 5:06

Okay. So uh you gave me a little bit of advanced notice, so I did some numbers, so I can unpack that. But let's start with a 50-year mortgage is 600 months. A 30-year mortgage is 360 months.

SPEAKER_01: 5:22

So let me ask you a question. And I just thought of this. A 50-year mortgage, are they gonna put an age limit of the person getting the loan on a 50-year mortgage? I mean, like if someone's 80 years old, are they gonna be uh getting a 50-year mortgage?

SPEAKER_02: 5:40

I mean, yeah, you know what? That's called optimism. That's called being optimistic. Yes. But they're no, they're not gonna put an age limit. That's discriminatory, and we can't do that. So we do know how old our clients are because we have to get a date of birth through the application, but that cannot play into the underwriting process. You can be 90 years old now and get a 30-year mortgage. You can be a hundred years old and get a 30-year mortgage. That can't weigh into it.

SPEAKER_01: 6:07

Okay.

SPEAKER_02: 6:07

So so anyway, that that won't be a factor. But as far as so, do you want to unpack some numbers here? I would like to. So what I did, and and I really didn't look at sales price as much as just loan amount, so we could compare it. So our median sales price around the Tri-Cities here is in the 300-ish range,$350. But I just went ahead and did a$400,000 loan amount for comparison purposes. So let's say you've got going rate right now, six and a quarter on a 30-year fixed, and you're doing a 30-year loan on a$400,000 loan amount. So that now we're not counting property taxes or insurance or anything. This is just your principal and interest payment. So$400,000, 30-year uh fixed rate at six and a quarter. So you're at about$2,464 per month. Okay.$2,464. That's for 30 years. So let's say, man, I'd like to do 50 year because I really can't afford this house to start with. So how much would you guess? Now I know you know the answer because you're looking at my sheet, but before today, how much would you have guessed going from a 30 year to a 50 year would save you on payments because you're stretching it out another 20 years?

SPEAKER_01: 7:29

Well, I would think that, you know, if my 30 year was a little over 2,000.

SPEAKER_02: 7:34

2,464.

SPEAKER_01: 7:35

And if I stretched it out. Now, me, I'm not a numbers person, so to me, I would think, oh my gosh, adding 20 more years, that loan amount's gonna go down by maybe half or or a little bit. You mean your payment, I mean. My payment. Yeah. My payment.

SPEAKER_02: 7:52

Yeah. So so you would think maybe save a thousand dollars a month or something, that's what I would think. Okay. So there's two factors um here that's gonna play in. So number one, if you go from a 30 year to a 50 year, you're gonna probably go up on rate about a half a percent, three-eighths to a half, because the lender's guaranteeing that rate for longer, so they're not gonna lock it in to the same rate as a 30 year. So instead of six and a quarter, you're probably gonna have six and three quarters, which is not terrible. I mean, maybe a half a percent more on the rate. You're gonna stretch out that payment for another 20 years, okay, and you are going to save a whopping$134 per month. Now, how do you like that?

SPEAKER_01: 8:32

$134. Well, that's uh some lattes, a few lattes every month.

SPEAKER_02: 8:40

Exactly. Why not cut out a pay?

SPEAKER_01: 8:42

So tell us the the payment. What was that payment on a 30-year and a payment on a 50-year?

SPEAKER_02: 8:48

$2,464 on a$30,$2,330 on a$50. So it was$134 a month less on a 50-year term.

SPEAKER_01: 8:59

$134 less. Steve, do you think that when people break down these numbers and a lender presents this information to them, do you think people are going to go for a 50-year?

SPEAKER_02: 9:14

I would hope not.

SPEAKER_01: 9:15

You know, I mean to save$134 a month.

SPEAKER_02: 9:18

I would hope that wouldn't make the difference to do it. Um, you want to s you want to hear something even more shocking?

SPEAKER_01: 9:25

Yes.

SPEAKER_02: 9:26

Your 30-year loan, total payback, and I know most people, uh the argument's gonna be there, well, most people don't keep their loan 30 years and they don't. But if you kept the loan to term, your 30-year loan is gonna pay back$887,040. So let's just round that to eight eight hundred and eighty-seven thousand. Your 50-year loan, you're gonna pay back$1,398,000. So you're gonna be paying almost$511,000 more dollars, which is over half a million in interest on the 50-year versus the 30 year. So how do you feel about that? That's is that worth saving$134 a month?

SPEAKER_01: 10:09

No, because I'm thinking if I took that$134 a month and just invested it, invested that money, I'd still be better off.

SPEAKER_02: 10:19

Yeah, yeah. So, well, let's talk about that a little bit. So when I look at loans, I and normally I don't like to look at, hey, where are you gonna be in 30 years? Because that's a that's a long time projection. Most loans pay off for refinance in about five to seven to a maximum of 10 years anyway. So I like to sit down with clients and say, how much equity are you gonna have in five years? Because a lot of clients are growing families, they're gonna want to trade up to a bigger house or whatever. So what's really important at that time is how much um equity they've got for a down payment on their next house. So so I like to look at that. And so let's let's talk about that and let's use four percent appreciation and where you're gonna be in in five years. So not a huge, huge difference, but in five years, now 10 years is gonna get interesting, but in five years, 4% appreciation, and based on what your loan will be paid down to, your 30-year loan, you're gonna have 106,105, 106, 105 in equity. 106,105 dollars in equity on the 30-year loan. On the 50-year loan, you're gonna have 84,643 in equity. So now here's where the argument comes in. It's still better off to have a 50-year mortgage than to be a renter, right? Okay. But that's the wrong question. Should a f should you have the 50-year or the 30-year is the right question, okay? So in five years, again,$106,000 in equity on your 30-year loan,$84,643 on your 50-year loan. So you've lost about$21,000 in equity by doing the 50-year loan, okay? So not I mean, it's not game changing, but it'd still be nice to have an extra$20,000 in your pocket when you go to buy your next house, right?

SPEAKER_03: 12:21

Correct.

SPEAKER_02: 12:21

But let's look at the 10-year difference. In 10 years on the 30-year loan at 4% appreciation, you're gonna have just over$303,000 in equity. The 50-year loan, using 4% appreciation and based on what your current balance is, you're gonna have$173,000 in equity. So$173,000 in your pocket versus$303 is a difference of$129,000. So, and some change, but I've I've rounded these numbers up, but you know,$129,000,$130,000 more in your pocket in 10 years, that's huge. That could be buying your dream house versus I'm just, you know, kind of checking off a few boxes, but not all of them. So to me, the 10-year marks where it gets really eye-opening, um, the needle's not moved as much in five, but it starts moving even in five, you know, you got just over 20,000, which, you know, is some money, but when you get to 129, 130,000 more in equity, that's when it's really kind of eye-opening. So, you know, what do you do? So here's here's my solution, okay? Or one of these solutions. There's never one solution one size fits all, but here's one thing you could consider, and you've already mentioned this, Christine, with your astute um knowledge of financial matters here. Skip the lattes, okay? Because you probably save$134 a month skipping lattes, okay? Here's another solution. Instead of buying a$400,000 house on a 50-year mortgage, let's say that$134 makes or breaks you, and you can't skip the lattes because you're addicted to coffee like we are.

SPEAKER_01: 14:07

Oh, I've got a better one.

SPEAKER_02: 14:09

What? Your nails. Oh, I like that.

SPEAKER_01: 14:12

So a manicure, pedicure, at best, you're gonna spend if you do it every two weeks, eighty to a hundred dollars with tip. Yeah.

SPEAKER_03: 14:23

Okay.

SPEAKER_01: 14:24

And most people get their nails done every two weeks. So if you just do nails, forty bucks a pop, ten dollar tip. So that's one hundred dollars a month if you're just doing your nails twice a week.

SPEAKER_02: 14:36

Okay, but what if you're a a single male buying this house? And that's not an option.

SPEAKER_01: 14:42

I don't know what it sounds like.

SPEAKER_02: 14:44

Um Okay, so but that's a great that's a great if that's good for couples or for a single female, but let's but um so here's my uh summary on this or my idea. Instead of buying the$400,000 house, you gotta save, let's just keep in mind you gotta save the$134. It's a make or break. You gotta do it. Go to the$380,000 30-year loan, and it's almost the same payment is the$400,000 50-year loan payment. You save about, you know,$144 a month by going down$20 or$20,000 on price. Okay, so just go down or save up$20,000.

SPEAKER_03: 15:28

Right.

SPEAKER_02: 15:29

Save up$20,000 more and do the 30-year loan, go down$20,000 in price. Don't get your nails, don't do your manny petty, don't buy your I mean, so there's a lot of ways to not do a 50-year loan. And that's what we're kind of talking about here, right? How can we avoid a 50-year loan? Which I would want to at all cost unless it was versus renting. Now, if I'm looking at it versus renting and I got to save that 134, heck yeah, I'm doing a 50-year mortgage, okay? So that's probably gonna be less than 1% of the time. But let's look at alternatives on how we could put you in a better financial position by not having to do the 50-year loan. Again, I'm not saying it's a terrible thing, but I am saying ask the right questions, make sure, you know, make sure you're looking at everything correctly. Now, let's let's take one more comparison out there and we'll we'll kind of stop with the comparisons. But um let's say you do the 50-year loan and 400,000 and you got whatever equity you've got in 10 years, what do we say you would have? 173,000?

SPEAKER_01: 16:35

Yeah, 173K.

SPEAKER_02: 16:37

If you did 380 and did the 30-year loan, the unit and so you're paying this is apples to apples because you're paying about the same payment, right? Okay. The payment on 30, on 30 years for 380 is about the same as 50 years at 400, right? But you've kind of, you know, you've backed off. You haven't done your 50-year mortgage, you've done 30 and you've done 20,000 less. Guess what? What? You've got 40,000 more in equity on the 380 house than you did the 400 on a 50-year mortgage.

SPEAKER_01: 17:11

Is that in five years?

SPEAKER_02: 17:12

That's in 10 years. So you've just put 40 more thousand in your pocket for the same amount of monthly payment. Same amount of monthly payment, and you've put 40,000 more in your pocket. So what's the smartest way to go? Of course, it's to do the 30-year loan. So, um, but I don't want people out there to be throwing rocks at me saying, well, you you said there's no use for a 50-year loan. No, I'm still for a 50-year overrenting. Okay. Sure. Let's get the the bottom line. But I'm not over, I mean, uh the 50 year will be hard to make me decide to do that over a 30-year loan unless someone just don't qualify.

SPEAKER_01: 17:53

Well, and a lot of times, you know, negotiating your price of a home with a homeowner, you know, if if you have a great realtor, you know, they can help you negotiate that cost down, you know, and get you to that 380.

SPEAKER_02: 18:06

Great point. Absolutely.

SPEAKER_01: 18:08

You know, so that that's an important thing, you know, know your realtor, make sure your realtor can negotiate for you, that they're in your in your court. And I'll I'll just say this, Steve. I really think that the federal government, they're really not addressing the issue. They've come out with a 50-year term for a home loan. Why in the world can they not work on reducing the interest rate? But it's almost like it's a switch and bait. It's like instead of working to reduce that interest rate, which we all need a reduced interest rate, that would drive home ownership more, people that would drive the housing market more, but instead now they come out with a 50-year term option, which like you said, I mean, if if it's opposed to renting, of course, do it, but is it the best thing for you?

SPEAKER_02: 19:01

Yeah. But and no, I and I agree. But now the federal government don't really have control of interest rates. The Federal Reserve does somewhat on short-term rates. It's a free market, though. The bond market buys and sells, and you know that that needs to remain a free market. Now, do I think the Federal Reserve should be doing more? Absolutely, but that's kind of separate from the federal government to a point people don't realize it's it is separate, and it's probably a good thing it remains separate. Yeah, that's right. But so so the market's gonna drive itself, and you know, but it can be influenced, and I think it does need to be influenced a little bit more than it has. The other thing, and not to not to take up for the federal government, because I would never probably do that because they make so many mistakes, but what I am hearing is that this is the first in incentives that the Trump administration is coming out to try to boost homeownership. So I do like that they're thinking about it and they say they're coming out with more and more and more. So I don't really want to hammer on them too hard until we see what else they're coming out with. I'd like to see more tax credits for first-time homebuyers. I'd love to see more tax credits for more, you know, families having children. Um, but you know, even even giving first-time homebuyers, you know,$10,000 for down payments, I'd be all for some of that, you know, because they still have to have credit and be responsible to get approved for a mortgage. So I think there's more the federal government can do to your point. And um, and hopefully they're telling us the truth. You know, hopefully this is the first of one of the tools in the toolbox to come out.

SPEAKER_03: 20:48

Right.

SPEAKER_02: 20:48

Uh, we'll find out. And so I'm encouraged by by that part. But man, if this is the only if this is the only thing coming out in the toolbox, it's not gonna be uh very effective because this is gonna be much to do about nothing. This 50-year mortgage is gonna be a big nothing burger. And um, and so if I said I was excited about this, I'd be lying. This is just I can't in good faith advise people to do this unless it's this or rent. And then sure, you know, that would be a different thing.

SPEAKER_01: 21:22

Well, and I think that comes with um you being a lender who cares and is working with individuals and to give the best as a consultant for them for their financial future.

SPEAKER_02: 21:36

Yeah, we have to look out for people, and uh and I I would never advise somebody to do something that I wouldn't myself do. And I would I can tell you right now whether no matter what age I am, and I'm not gonna reveal that, but uh and you probably wouldn't want me to, but uh even if I were you know 20 years old, I wouldn't be getting a 50-year mortgage.

SPEAKER_01: 21:58

No, and I think about Dave Ramsey, you know, he always talks about the more you borrow, you are a slave to the lender.

SPEAKER_02: 22:05

Yeah.

SPEAKER_01: 22:05

And I can see Dave Ramsey probably on life support at this point.

SPEAKER_02: 22:09

Yeah, he had a bad day yesterday, and they say they say he's in a coma from the shock of hearing that 50-year mortgage. So Dave's not happy. Dave's not happy.

SPEAKER_01: 22:19

So thank you, Steve, and uh really appreciate that update for being with us today.

SPEAKER_00: 22:26

This has been Benchmark Happenings, brought to you by Jonathan Tipton and Steve Reed from Benchmark Home Loans. Jonathan and Steve are residential mortgage lenders. They do home loans in Northeast Tennessee, and they're not only licensed in Tennessee, but Florida, Georgia, South Carolina, and Virginia. We hope you've enjoyed the show. If you did, make sure to like, rate, and review. Our passion is Northeast Tennessee. So if you have questions about mortgages, call us at 423 491 5405. And the website is www.jonathansteve.com. Thanks for being with us, and we'll see you next time on Benchmark Happenings.