Micah Smith, founder of Micah Abigail LLC and @fitcreditdoctor, talks to Fox News Digital about why he’s so opposed to the 50-year mortgage rate.
When the Trump administration broached the idea of 50-year mortgages, credit solutions expert Micah Smith didn’t mince words.
“It was frustrating,” she told FOX News Digital.
In theory, you’re guaranteed lower monthly payments if you pay off your mortgage for more than half a century. In fact, Smith warns that it could put millions of Americans, especially retirees and first-time buyers, into what she calls a “high-risk” trade. This is a “complete and utter reversal of the market from being completely submerged.”
“My concern is that 50-year mortgages are going to attract uninformed consumers and consumers who don’t understand how finance works and how interest rates work,” Smith said. “If you take out a 50-year mortgage, it will take four times as long to build equity in your home.”
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“It will attract consumers who are already struggling,” she added. “The gap between rich and poor is going to get even bigger again, and I think it’s going to get even bigger in mortgages over the next 50 years.”
Is a 50-year mortgage a “sentence” for life? Credit solutions expert Micah Smith spoke to Fox News Digital about the risks of potential new loans. (Getty Images)
In early November, President Donald Trump and administration officials take out a 50 year mortgage They believe they can expand access to homeownership. President Trump posted a graphic on Truth Social depicting himself with “great American presidents,” including President Franklin D. Roosevelt, whose New Deal housing reforms paved the way for modern 30-year mortgages, and hinted at developing a 50-year version.
Federal Housing Finance Agency Director Bill Pulte added in a post on
Under the current rulesMortgages longer than 30 years generally do not qualify as “qualified mortgages” under the CFPB’s ability-to-repay rules, and the FHA and GSE currently only allow 40-year terms for loan modifications.
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a UBS analysis We found that on a 50-year mortgage, the total interest payment equals about 225% of the home price. This is more than twice as much as a 30-year loan. UBS also pointed out that with a 50-year term, the borrower would have only been able to repay about 11% of the principal after 20 years, highlighting how slowly capital is built over such a long period of time.
“The people who will be helped are the ones who are planning…those who have substantial plans for higher incomes in the future,” Smith said, noting that those hardest hit could be first-time homebuyers, retirees and even military families.
“I’m definitely concerned about older generations, people who are already struggling to make ends meet, people who are probably living on social security…If they don’t even have the ability to fix a house that they don’t own, that’s very worrying,” she explained. “I also think it’s going to be a really scary situation for people who are probably in the military because they don’t really have the ability to build equity at all.”
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“We’re already talking about the younger generation, Generation Z, first-time homebuyers coming in with lower credit scores. So if they jump on these 50-year mortgages and don’t even participate in the premium tier, that’s really scary,” Smith continued.
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The White House did not immediately respond to Fox News Digital’s request for comment.
Asked how a 50-year mortgage might change the way customers are coached on budgeting, emergency funds and home maintenance, Smith emphasized saving as much as possible before buying.
“If you’re budgeting now, you need to be better at budgeting,” Smith said. “You have to save money for a rainy day…if you can just save a little bit, a little bit of money, you have compound interest after all.” important to wealth It took quite a while. And at this time, we have not received any inquiries from consumers about 50-year mortgages. ”
“If you’re sitting here and you’re one step away from being submerged by a market correction, that’s what’s really scary to me.”
“But I teach real estate agents, investors, and brokers all over the country, and they now… [are] In fact, that’s what surprised me the most,” she claimed. [there is] We’ve seen a rather positive response from some mortgage lenders, but it’s important to understand that different motivations tell different stories. ”
Mr Smith agreed that a 50-year mortgage sounded like a lifetime commitment and warned against a culture of instant gratification and loss of long-term thinking.
“We live in a microwave society and I think a lot of people can’t think about the long term and that’s what keeps a lot of us in trouble… A mortgage is supposed to be like you get it, you buy it, you pay it off and you own something.”
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New York-based credit repair expert Micah Smith spoke to FOX News Digital about how Gen Z is facing debt dilemmas across the country.
“If you want to be successful, you have to take a long-term view,” she says. ”[The 50-year mortgage] That really spells disaster in the long run. ”
When asked to describe the whole idea in one word, Smith didn’t hesitate to say, “Dangerous.”
“You’ve got to do the math. You’ve got to crunch the numbers. And, again, we’re one market shift away from being completely and completely submerged. So I think the best word to describe this is absolutely risky.”
FOX Business’ Eric Revell contributed to this report.
