The Hidden Cost of a 50-Year Mortgage: Nearly $1M Extra Interest in One City
Written by
Gabrielle Olya
Edited by
Brendan McGinley
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President Donald Trump’s proposal to introduce 50-year mortgages promises smaller monthly payments, but borrowers would pay dramatically more in total interest and build home equity far more slowly. A new Realtor.com analysis found exactly how significant that extra interest could be, and in some cities, it’s nearly $1 million extra.
The analysis compared mortgage costs for a traditional 30-year term versus a 50-year in three types of real estate markets. Crunching the numbers revealed an alarming truth: the interest is killer.
High-Cost, Low-Supply Market: San Francisco-Oakland-Fremont, California
- Median listing Price: $954,500
- 30-year monthly payment: $5,289
- 50-year monthly payment: $4,682
- Monthly savings: $607
- 30-year total interest: $1,045,105
- 50-year total interest: $1,949,903
- Extra total interest: $904,798
In the San Francisco market, buyers would get a huge reduction in their monthly payment, but the price and interest risks with this type of loan would be extreme, said Joel Berner, senior economist at Realtor.com.
“The extra $904,798 in total interest is a massive long-term penalty,” he said in a news release. “Since supply is stagnant, the new buying power fueled by the lower payment is likely to increase competition and push up home prices, potentially negating the $607 monthly savings immediately by increasing the required loan size.”
High-Growth, Mid-Cost Market: Raleigh-Cary, North Carolina
- Median listing Price: $458,020
- 30-year monthly payment: $2,538
- 50-year monthly payment: $2,246
- Monthly savings: $292
- 30-year total interest: $501,497
- 50-year total interest: $935,667
- Extra total interest: $434,170
The monthly savings a 50-year mortgage would provide could act as a bridge for income-constrained buyers who want to live in the desirable Research Triangle area — but the downside is the equity drag.
“This financial tool could accelerate demand and contribute to some home price inflation,” Berner said. “Additionally, the slow equity build-up could lock in buyers for longer, making it challenging for buyers to trade up in five to 10 years.”
Lower-Cost, Stable Market: Akron, Ohio
- Median listing Price: $239,570
- 30-year monthly payment: $1,328
- 50-year monthly payment: $1,175
- Monthly savings: $153
- 30-year total interest: $262,311
- 50-year total interest: $489,406
- Extra total interest: $227,095
In lower-cost, lower-income areas, the monthly savings could be make or break for potential buyers. However, the additional interest costs are significant and should be avoided if at all possible.
“In a market where the 30-year payment is already relatively affordable, a 50-year term would mean that the borrower would be taking on $227,095 in extra total interest,” Berner said. “This is a disproportionate long-term cost for marginal short-term monthly savings, unnecessarily extending the path to home equity and eroding long-term financial security.”
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