Why not just extend bank loans to mortagages to 50 years with government support for banks?

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Joe bought the house and made a bad Investition.Die government should not help the poor investors, but we need homes market you halten.Reduzieren payments with a mortgage of 50 years and if the owners of the house that If they want to be the new pay a reduced pension. This lets lower the Einkommensgruppen.Wenn they want you and me to pay for their bad investment, then screw the market not the market em.vom

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  1. Reply
    EBA
    May 1, 2011 at 8:18 am

    50yr loan will make things even worse due to the structure of mortgages… you pay off very little principle on the loan the first part of the lifetime… meaning that the first 15-20yrs or so you are mainly paying interest, and very little of the actual amount loaned… let’s say the average rate right now is 4.5%… with a 30yr mortgage, in reality you are paying probably almost twice as much due to how mortgages are structured… increasing the lifetime of the mortgage to 50 years will just delay the time when you actually start paying off the loan… so instead of paying interest for 20 years, you’ll be paying interest for 35 years… it will give more time for the mortgage to collect even MORE interest… if you look at how 15yr vs 30yr mortgages are structured, you’ll see that the people who choose to go with the 30yr option pay A WHOLE LOT more than those with 15yr mortgages… so 50yr term will simply not work… it will put people in just more of a hole… what we need to do is to:
    1) amortize the principal of the loan to reflect current real estate prices… (reduce principles on houses to what they ACTUALLY cost now)
    2) restructure the payoff system, so when you have a 4.5% loan, it actually stays at 4.5%… not 90% because they make you pay interest first and principal later… that’s just straight up robbery… I have no clue why such a system is allowed in the US… the banks are literally not allowing people to pay off the loans so they would collect more interest, it’s madness…

    so what this will result in is that instead of having to pay 390k on a 200k mortgage, we’ll have to pay 94.05k on a 90k mortgage (90k principal, and 4.05k interest)… such a loan can be easily repaid in 5 years with payment less than 1k a month… (given that the house is the same, and 90k is the new amortized market price)

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