Latest / Connor with Honor: AI, Real Estate and Real Life / 50 Year Mortgage versus a 30 year mortgage - Let's break down the numbers in interest to be paid to the bank

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50 Year Mortgage versus a 30 year mortgage - Let's break down the numbers in interest to be paid to the bank · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: So I'm sure you've heard by now that they're contemplating entertaining a 50-year mortgage.
• 0:06
  SPEAKER_00: I'm Connor McIver.
• 0:07
  SPEAKER_00: We're going to talk about what's happening and we're going to break that down.
• 0:10
  SPEAKER_00: Now, in the lending world, the idea of a 50-year mortgage, I'm not a lender, I'm a real estate agent, but I can do the math.
• 0:17
  SPEAKER_00: I want to help you understand what this actually means for your wallet, your equity, and your long-term financial health.
• 0:24
  SPEAKER_00: So people hear 50 years and immediately think, wow, a lower payment, problem solved.
• 0:30
  SPEAKER_00: But like anything in real estate, if you don't pause and apply a tiny amount of critical thinking, you can get taken advantage of.
• 0:38
  SPEAKER_00: So let's take five minutes, look at the real numbers, and I can help you avoid doing something that looks good on paper, but maybe it'll cost you more of a fortune over a lifetime.
• 0:48
  SPEAKER_00: Now, I'll give you a loan scenario.
• 0:51
  SPEAKER_00: Looking at just a basic purchase price, a real Santa Clarita example.
• 0:56
  SPEAKER_00: And if you're outside the Santa Clarita Valley, it's still going to apply.
• 0:59
  SPEAKER_00: Let's look at a purchase price of$850,000.
• 1:03
  SPEAKER_00: We'll put 20% down.
• 1:04
  SPEAKER_00: That's$170,000 there.
• 1:06
  SPEAKER_00: So the loan amount's going to be$680,000.
• 1:09
  SPEAKER_00: Now, of course, you can adjust the numbers.
• 1:11
  SPEAKER_00: We'll take an interest rate of 6.5%, and we're going to look at 30 years versus 50 years of payments.
• 1:18
  SPEAKER_00: Now, as you know, the beginning of a 30-year fixed or even a 50-year fixed mortgage, a majority of those payments are interest.
• 1:25
  SPEAKER_00: Now we're increasing that time frame to 50 years.
• 1:28
  SPEAKER_00: So we're going to give you the monthly payment breakdown.
• 1:30
  SPEAKER_00: On a 30-year mortgage, the payment is$4,298 a month.
• 1:35
  SPEAKER_00: That's$4,298 a month.
• 1:38
  SPEAKER_00: On a 50-year mortgage,$3,833 a month.
• 1:42
  SPEAKER_00: That's$3,833 a month.
• 1:45
  SPEAKER_00: That's$465 cheaper on a 50-year mortgage, an additional 20 years of payments.
• 1:51
  SPEAKER_00: And that can be a lot for families and does make a difference.
• 1:55
  SPEAKER_00: But here's the punchline.
• 1:57
  SPEAKER_00: Total interest cost.
• 1:58
  SPEAKER_00: Now watch this.
• 1:59
  SPEAKER_00: Over 30 years, you're going to pay$867,000 in interest.
• 2:04
  SPEAKER_00: Over 50 years,$1.62 million in interest.
• 2:08
  SPEAKER_00: That's$1,620,000 in interest versus$867,000.
• 2:15
  SPEAKER_00: Now that's$752,000 more for the privilege of paying less per month, about$500 or so.
• 2:22
  SPEAKER_00: So the trap is going to be this: a 50-year mortgage feels affordable because the monthly payment drops.
• 2:28
  SPEAKER_00: But affordability and financial health, they're not the same thing.
• 2:31
  SPEAKER_00: The 50-year loan keeps you stuck paying mostly interest for decades.
• 2:35
  SPEAKER_00: You're building equity with a spoon, not a shovel.
• 2:39
  SPEAKER_00: Now, here's the AI angle.
• 2:41
  SPEAKER_00: You know, I always love talking about AI because really it's going to change the world than it has already.
• 2:46
  SPEAKER_00: So here's the fun part.
• 2:47
  SPEAKER_00: With the pace of AI, the way that it's evolving, there's talk of extended lifespans, optimized health, prevention tools, even medical artificial intelligence that monitors your body better than a doctor.
• 2:59
  SPEAKER_00: You plug it in, your toilet monitors everything coming out, you got blood that's taken easily, and so on and so forth.
• 3:05
  SPEAKER_00: So if we're living longer, sure, the concept of a 50-year mortgage might sound less crazy than it does today.
• 3:12
  SPEAKER_00: But guess what?
• 3:13
  SPEAKER_00: Doesn't change.
• 3:14
  SPEAKER_00: Amortization math.
• 3:16
  SPEAKER_00: You still have to pay the bank first.
• 3:17
  SPEAKER_00: You still pay mostly interest up front and you still delay building wealth.
• 3:22
  SPEAKER_00: Most people that buy the first house, usually that's not their last house.
• 3:26
  SPEAKER_00: With very few very few very few people that that actually applies to, where they never move.
• 3:33
  SPEAKER_00: Most people move up or downsize at some point or maybe even relocate.
• 3:37
  SPEAKER_00: So when a 50-year mortgage might make sense if the alternative is renting, if you need the payment reduction to comfortably qualify, if you plan to live in the home only five to seven years, if you're banking on income growth appreciation or refinancing.
• 3:53
  SPEAKER_00: But understand the cost.
• 3:54
  SPEAKER_00: Now, as someone who's watched buyers make amazing moves and offers make and others make financial mistakes that they regret for decades, like in some cases, maybe interest-only stuff, the lower payment is seductive.
• 4:07
  SPEAKER_00: But every time you stretch a loan, the bank wins.
• 4:10
  SPEAKER_00: Banks love this idea.
• 4:12
  SPEAKER_00: They want you in long-term interest mode forever.
• 4:16
  SPEAKER_00: So if you want to get wealthy, you want to get out of interest mode as fast as possible.
• 4:21
  SPEAKER_00: If you want to run the numbers, compare terms, or see what a realistic payment strategy looks like before you make a move, every single house for sale does have those payments associated with it.
• 4:30
  SPEAKER_00: You can go to my main site at Santa ClaritaOpenhouses.com.
• 4:34
  SPEAKER_00: Now, if you're thinking about selling and you want the truth, not a fairy tale, you can get your net sheet at honorsold.com.
• 4:41
  SPEAKER_00: There's no obligation, just the facts as to what that commission structure looks like with all the fees when you want to sell a house.
• 4:47
  SPEAKER_00: If you're ready to book with me, you can go to zoome scv.com and get on my calendar and we will talk then.
• 4:54
  SPEAKER_00: I hope you're well.
• 4:54
  SPEAKER_00: I'm Connor with honor.
• 4:56
  SPEAKER_00: Thank you so much for watching, and that's kind of what a 50 year mortgage could mean to you and yours.
• 5:00
  SPEAKER_00: Be well.
• 5:01
  SPEAKER_00: We'll see you in the next one.