Is a 50-year mortgage just one step closer to a perpetual (and possibly predatory) subscription service?
As featured in Inman News.
You may be hearing in the news and buzzing on social media, “What are the potential risks and benefits associated with a 50-year mortgage compared to a 30-year?”
This question is best answered if it is clarified what a person‘s end goal for homeownership is.
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| AI-generated image of a 50-year mortgage being reviewed. |
The Investment Goal: The Risk of Never Truly Owning
The biggest risk of a 50-year mortgage for anyone who wants their home purchase to be an investment is death. Seriously, that is not hyperbole. With the median homebuyer age inching closer and closer to OVER age 40, living an additional 50 years may not happen for everyone. The average 40-year-old may hope to live beyond 90, but who knows? Ultimately, that means that in one’s lifetime, she may not enjoy the fruit of their labor, mortgage-free, nor will her heirs necessarily reap the generational benefits of homeownership. In short, that means actually owning a home debt-free after making regular payments for the length of the mortgage term (50 years) may no longer be attainable.
And what happens for those who don’t plan on working until age 90 or beyond, but other costs (such as healthcare) rise? I cannot imagine my 96-year-old grandma having to not only pay a mortgage but still go to work.
The Short-Term or "Fixed Payment" Goal: When It Could Work
Of course, homeownership with a 50-year mortgage may still be a good option for those who follow the average of staying in a home, give or take, seven years. That, of course, is dependent upon you being able to sell for more than you paid.
Additionally, homeownership with a 50-year mortgage may be suitable for those who have demonstrated discipline and have sufficient discretionary income to pay off their mortgage faster than the current standard of 30 years. Kudos to those who pay their mortgage off in 10 to 15 years or less!
However, if your homeownership goal is not to be debt-free, but rather to have a fixed interest rate that does not fluctuate each year like leasing an advertised “luxury” corporate apartment, then this could seem like a win. Particularly if you lock in a fairly low, fixed interest rate for the life of the 50-year loan. At least until you count the total cost…
The Numbers and The Reality Check
My students in my MBA Economics class crunched the numbers (with a cost-benefit analysis) on a $400,000 home loan at 6%:
The 50-year mortgage seems to offer a break in the short run. Again, great if you can sell high in just a few years.
Realistically, for some, the 50-year mortgage becomes similar to obtaining a loan for higher education, a death spiral of loans lasting for decades. For many middle-aged millennials (I have friends in their 40s still drowning in college loans), this 50-year mortgage product has become fodder for online memes and rage bait like this:
https://www.instagram.com/reel/DQ2OOyZiXS4/?igsh=MXFheDRidW9vM2Vncw==
What History Has Taught Me
Does anyone know of a period in recent mortgage history when borrowers were steered to loans that were only beneficial if they didn’t keep them for long, unrealistically? Hint: it wasn’t just “Cash Money Records taking over for the 9-9 and 2000s”. That period was marked by high rates of predatory lending, which contributed to “The Great Recession” (a topic I researched at the tail-end of that recession for my Juris Master’s Degree final thesis, entitled “Dodd-Frank vs. Predatory Lending”). Personally, I recall buying my first home shortly after college in 2004. My initial loan officer was "insistent" (a.k.a. the illegal, unfair housing and lending term of “steering”) that I get a 3-year adjustable-rate mortgage (ARM). Thankfully, my business degree training (college augmented my critical thinking and business savvy) and my dad required I find a new loan officer who was comfortable with a fixed rate.
In October 2007, the time when my ARM would have adjusted had I gone that route, the stock market crashed, and the next couple of years tragically saw mass loan defaults and foreclosures. And if you didn’t know and perhaps missed the movie, “The Big Short” (see clip below), predatory steering to those ARMs contributed to “The Great Recession.” They offered low initial "teaser" rates that would dramatically increase after just a few years, leading to a surge in defaults as the market crashed and homeowners could not afford the higher adjusted payments.
From an economic standpoint, "The Great Recession" demonstrated that when key market safeguards (like fair housing & lending, which promote accountability, transparency, and accurate information) break down, the resulting market failure is not just local but can be catastrophic for the entire, global system. Yet, since that was almost 20 years ago, do we collectively remember these lessons?
The Predatory Potential for the Middle-Aged Buyer
If you are thinking, "Duh! We lived through “The Great Recession”. We don't need a lesson on this;” then, read what an agent commented on my Instagram video featuring my grandma:
“...You can always pay it ahead of time. It is an appreciating asset, and most people build equity on appreciation rather than paying into their mortgage...”
This can be true. However, we do a disservice to homebuyers by not acknowledging the bona fide historical exceptions. Frankly, this quote feels like it is straight out of 2005, NOT knowing all we know now from “The Great Recession”. Yet, it is from 2025, yikes! Thus, it’s likely time to start teaching more about the lessons of “The Great Recession”. The scenario I illustrated with my grandmother (in the video above) is if she had hypothetically gotten a 50-year mortgage in her 40s or 50s. With the median age of first-time homebuyers now at 40, this is not a far-fetched occurrence for those of us middle-aged now. Extra payments (read: discretionary income) on a mortgage become feasible when your income is stable or increases. But for some nearing retirement, retirement may bring a fixed or decreased income with rising expenses, particularly if someone has an unexpected fall/medical bills. In short, a 50-year mortgage for someone middle-aged, nearing retirement (making it hard to ever actually own a home without a mortgage payment), feels predatory, particularly if the CONS are not shared with the pros.
The Bottom Line: A Perpetual (Possibly Predatory) Subscription?
If you hate keeping up with 5-plus, never-ending streaming subscriptions, then adding a 50-year mortgage with have you seeing red. Is a 50-year mortgage just one step closer to a perpetual (and possibly predatory) subscription service for the home you are supposed to own, not rent?
For instance, imagine you are now a 55-year-old empty-nester and you want to downsize your home. The 50-year mortgage sounds attractive due to the low monthly payments, but is it really feasible for you to have a mortgage until you are 105 years old?
Even at 25 or 30 years of age, having a mortgage for the next 50 years still means you will easily be near 80 years old by the time the home is paid off (again, if selling the home early or making additional payments are not feasible). “All my life I had to fight” becomes a real-life mantra and not just a movie and book quote. Who wants to live out a version of the trauma in Alice Walker’s “The Color Purple” to own a home? Ultimately, the 50-year mortgage, at best in the long run, feels like a perpetual subscription (who wants that?) for your house that you had hoped to own, not rent. At worst, it sounds like the 50-year mortgage will open the door to predatory lending, and we know what can happen to people who are misinformed or coerced into overleveraging in a bad economy or with unexpected bills.
Dr. Lee Davenport is an MBA graduate school professor, real estate coach, and author (including of Be a Fair Housing D.E.C.O.D.E.R., How to Profit with Your Personality, and over 270 news bylines). Dr. Lee trains and empowers business students, executives and real estate professionals around the globe on how to work smarter with their unique personalities and how to “advocate, not alienate,” so everyone has access and opportunity in real estate and business.
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