Trump’s Risky Mortgage Gambit: Short-Term Relief, Long-Term Risk

President Donald Trump and his administration are floating a series of bold mortgage proposals aimed at making homeownership more affordable — but experts are raising red flags about the long-term costs.

What’s on the Table?

Here are the key financing ideas under consideration:

1. 50-Year Mortgages
   • This proposal would extend the traditional 30-year mortgage to 50 years, lowering monthly payments.
   • But the trade-off is steep: far more interest over the life of the loan and much slower accumulation of home equity.
   • Economists warn that while the monthly payment drop may look attractive, the total cost could balloon significantly.
   • There’s also concern that such long-term debt could worsen market risk and lock borrowers into decades of payments.
2. Assumable & Portable Mortgages
   • Assumable Mortgages: Buyers could take over a seller’s existing low-rate mortgage.
   • Portable Mortgages: Homeowners might be able to carry their mortgage (and its favorable rate) to a new property — a concept not yet implemented in the U.S.
   • These options would help some buyers, but they could also favor repeat buyers or those who already secured a good rate, potentially driving up demand and pushing home prices higher.
   • Assumable mortgages, while beneficial, come with hurdles: buyers must qualify, and they may need to make a large payment to bridge the difference between home price and remaining mortgage balance.
3. Builder Rate Buy-Downs
   • Homebuilders might offer to buy down interest rates on mortgages for buyers, reducing monthly costs.
   • But critics argue that instead of lowering home prices, these incentives simply mask costs — and may even inflate property prices.
4. Seller Financing
   • In seller financing, the home seller effectively acts like a bank: the buyer makes payments directly to the seller over time, plus interest.
   • It’s appealing for buyers who don’t qualify for traditional loans and for sellers who want to extract value over time.
   • But there’s risk: if interest rates don’t drop, buyers might be forced to refinance later — possibly at much higher rates.
   • Regulators have historically scrutinized seller financing, citing risks of exploitation, especially in underserved communities.

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Why Experts Are Skeptical

• Interest Overload: Stretching a loan to 50 years may lower monthly payments, but it dramatically increases the total interest paid.
• Slow Equity: With a longer loan term, homeowners build equity at a much slower pace.
• Housing Supply: Many economists argue that these financing tweaks don’t address the real problem: a critical housing supply shortage.
• Market Risk: Long-term loans could introduce greater financial risk into the mortgage market; lenders may charge higher rates for 50-year mortgages given their risk profile.
• Equity & Wealth: Because equity grows slowly, these mortgages may not be effective in helping homeowners build generational wealth.

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Bottom Line