Anonymous wrote:Because most people either can't or don't want to lock themselves into a higher payment with shorter duration. Plus, the bank can charge a higher interest rate with a longer term. I mean if I were a bank and can charge 5% interest for 30y vs 4% interest for 15, guess which one I would prefer, even if paid off early.

+1. A friend of mine was in a situation where the 15-year mortgage backfired on her. She and her husband bought a house in NW DC approximately 8 years ago. They both had good jobs, and had 2 sons. Their jobs were going well, and so they poured money into the house, making extra payments, with the goal of eventually paying off the house early. Then, during the pandemic, her husband's earnings went promptly to 0, as he was in a job that depended on big in-person events. It seems like they should have been able to get the PPP money, but I guess that wasn't enough. If they had had a 30-year mortgage with low payments, and if they had not made extra payments, they could have made it through the pandemic. Instead, they had to sell the house and move to a LCOL state, right when the boys were within 1-2 years of graduating from high school.

The land gets more and more expensive with each generation.

Because most people either can't or don't want to lock themselves into a higher payment with shorter duration. Plus, the bank can charge a higher interest rate with a longer term. I mean if I were a bank and can charge 5% interest for 30y vs 4% interest for 15, guess which one I would prefer, even if paid off early.

My grandparents paid off their first house in 10 years and bought their second house that they lived in until they died with cash. They were immigrants with no education beyond high school and my grandfather, the sole earner, worked in a factory in a major city. Granted these houses cost like $20K, but I think it was a combination of inflation, taking shorter term mortgages, and prioritizing paying off debt.

We had a 30 year mortgage on our first house and I promised I would never do that again, that I would buy a house we could afford on a 15 or 20 year term and that's what we did.

Posters reading this thread should go read the thread about stretching oneself on a mortgage. When I was 30 and bought my first house I was bright eyed and bushy tailed and had no kids. When we needed more space at 40 for the family, my orientation toward work and money had changed and I wanted the shortest mortgage possible.

A lot of the value is in the land which is limited close in. We have a 15 year and could pay it off but the rate is 2.5% so it makes better financial sense to invest the money elsewhere. We will have two homes paid off before retirement though. I would not want to retire with a mortgage or rent payments.

Two identical houses could be $300,000 apart in selling price because one is looking cared in a “bad” school district.

The quality of teaching might not be worse, but the bad school district is in a county with low SES families whose kids tend to do worse on state tests. This brings down the GreatSchools ratings. This becomes a vicious cycle because poorer people can only afford homes in the “bad” school district.

Anonymous wrote:

Anonymous wrote:You mean why are mortgage terms for 30 years? I would say it's because they assume you buy the house from age 30-35, and then it's paid off before you retire.

Not about mortgage but affordability.
If our economic situation is always getting better shouldn’t housing cost go down with improvements in construction and other technology ?

You aren’t paying for the house construction.
You are paying for access to a school district that only pulls from wealthy families.

Anonymous wrote:
In Japan, for decades, mortgages exceeded the lifetime of owners and were passed on to their descendants.

Used to be called grandfather loans

Also NIMBYism in many parts of the country. Insistence on SFHs, low density, large lots, god forbid apartments, in the name of preserving whatever “character” existed when the current residents moved in.

We need more housing in general, to fill in close in areas with more density. Anywhere that’s zoned SFH should also permit some kind of MFH.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You mean why are mortgage terms for 30 years? I would say it's because they assume you buy the house from age 30-35, and then it's paid off before you retire.

Not about mortgage but affordability.
If our economic situation is always getting better shouldn’t housing cost go down with improvements in construction and other technology ?

No. Those improvements have raised costs because homes do more than they used to. Also codes are a lot higher than they were. You can't build the same house now as you could in years past.

30 years is just a number that makes things affordable. Could be 25 or 35. As PP said there will be 40 year products at some point. There have been in the past. Many people use 15 years.

With higher demand land price goes up too.

Anonymous wrote:

Anonymous wrote:You mean why are mortgage terms for 30 years? I would say it's because they assume you buy the house from age 30-35, and then it's paid off before you retire.

Not about mortgage but affordability.
If our economic situation is always getting better shouldn’t housing cost go down with improvements in construction and other technology ?

No. Those improvements have raised costs because homes do more than they used to. Also codes are a lot higher than they were. You can't build the same house now as you could in years past.

30 years is just a number that makes things affordable. Could be 25 or 35. As PP said there will be 40 year products at some point. There have been in the past. Many people use 15 years.

Anonymous wrote:Most people will never have enough money to pay over significantly less time.

Flat out false. Not hard at all to cut 5 years off that. Little pain to take 8-9 years off.

Because in most other countries, you won't be able to afford a tiny apartment in 100 years. So god bless America.

Anonymous wrote:It does not. We are paying ours off in about 18 years. We made it priority. We could easily pay it off now and may soon but interest is very low.

You're not typical.

Actually, the *typical* family never owns a home.

It does not. We are paying ours off in about 18 years. We made it priority. We could easily pay it off now and may soon but interest is very low.