A proposal floated by the Trump administration to create a 50-year mortgage product to improve housing affordability could offer significant immediate savings to homebuyers, but at the steep cost of a doubled interest payment burden over the life of the loan, according to a recent analysis by John Lovallo of UBS Securities.
Caveating that many basic questions remain unanswered, a back-of-the-envelope calculation shows a clear trade-off between immediate monthly affordability and long-term debt accumulation. Based on Lovallo’s estimates, the extended loan term could lower the monthly payment on a median-priced home by roughly $119.
