When I was young I thought the point of a mortgage was to pay it off. A 30 year mortgage made sense to me. It covered the child rearing years, and the prime wage earning years resulting in a paid off home come retirement and empty nesting at the end of that 30 yrs.
A 40 yr mortgage, taken on in your late 20s/early 30s doesn’t get paid off until you’re 70s.
Is the point of a mortgage merely to lock in your cost of housing (but not your property tax in many states) for 40 yrs? And eventually 50? Or 60? Bc screw each up and coming generation, we’re not fixing the problem just can kicking so the game is lock in your costs as soon as possible it’s only going up!
The word itself suggest as much as well. "Mortgage" is derived from Old French mort ("dead") + gage ("pledge"). In other words, it was a pledge that was supposed to die either when it was paid off, or when the borrower defaulted.
> And it seemeth, that the cause why it is called mortgage is, for that it is doubtful whether the feoffor will pay at the day limited such sum or not: and if he doth not pay, then the land which is put in pledge upon condition for the payment of the money, is taken from him for ever, and so dead to him upon condition, &c. And if he doth pay the money, then the pledge is dead as to the tenant, &c. [Coke upon Littleton, 1664]
If you combine a mortgage with term life insurance matching the remaining principal to be repaid, you can synthetically create that scenario. It’s pretty classic financial advice for a young high single earner starting a family.
I always thought it was interesting that the English word for a home loan is mortgage (meaning death pledge) but the French use another word, hypotheque. I wonder why the French don't use the same word. Maybe the transparency hits too close to home?
Yes, the point of a mortgage in the US is mostly to locking in a monthly payment in a manner that allows for homes to be sold at a much higher price than their previous sale. It's about increasing wealth, and it's not necessarily about paying off the note before it's resold.
The point of a mortgage is to be able to live in a house before you can afford to pay for all of it.
There's no reason why you have to pay off a mortgage. You can sell the house and recoup your partial equity in the property.
e.g., you can start with a 30 year mortgage, sell it at 10 years for an equivalent property with a 20 year mortgage, do it again in 10 years for a 10 year mortgage, and end up fully owning a house even if it's not the one you started with. Or renting for the remainder of your life with your accumulated equity and savings.
A 40 yr mortgage, taken on in your late 20s/early 30s doesn’t get paid off until you’re 70s.
Is the point of a mortgage merely to lock in your cost of housing (but not your property tax in many states) for 40 yrs? And eventually 50? Or 60? Bc screw each up and coming generation, we’re not fixing the problem just can kicking so the game is lock in your costs as soon as possible it’s only going up!