Car loans have gone from 48 month payment terms to 60 months, to 72, even 120 months. Why are mortgages typically for 30 years? Do people really pay 30 years without moving to pay off the notes? Since housing prices are going up and wages aren’t keeping up, why aren’t there 40 or 50+ year mortgage repayment options to make payments more affordable? Thank you!
In: Economics
There’s an article on why 30 years:
[https://www.marketplace.org/2018/10/31/why-do-we-have-30-year-mortgage-anyway/](https://www.marketplace.org/2018/10/31/why-do-we-have-30-year-mortgage-anyway/)
summary: the original system was terrible (you only paid interest, then owed all the money, so people took out another loan, repeat this failure cycle), so the government stepped in.
30 years turns out to be affordable-ish monthly payment, but it’s already pushing the boundaries of the risks lenders are willing to take on so there aren’t longer terms typically available.
As far as moving: no, people don’t always life there for 30 years.
Typically what happens is either:
1. The money from selling the house pays off the remainder of your mortgage all at once. So a new mortgage from the new owners pays off your mortgage
2. People rent it out for more than their mortgage taxes etc.
Latest Answers