I'm Howard wrote:Donovan Bailey is advertising a 50 Year Amortization for Mortgages, and hopefully other lenders will follow suit.
A payment schedule such as this will allow many more people to get into the R.E Market, and since most people move several times, at the end of the day, many will trade down and end up Mortgage Free.
steves wrote:Interest, like tax, can't be compared in this way. It is the present value of the interest stream which counts.
In fact, I made a quick calc which makes a case for longer amortization.
30 year old earns 80K, plans to retire at 65, dies broke at 95. Rates for loan and rsp growth both 5%, cpi 2%. Starts with 150K in his RSP.
His $250K mortgage would mean a $46,812 lifestyle should it be amortized over 25 years. Over 50 years, it would deliver a $47,147 lifestyle.
It actually surprised me, BTW.
dagan wrote:Second, the present value of any new loan should be the amount of the loan.
arthur wrote:money flow is there, it just will go to a differant destination.
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