PERRY COUNTY, Ky. (WYMT) -The Trump administration announced earlier this month they were working on a plan to make homes easier to buy for Americans through a 50-year mortgage option, prompting local real estate professionals to examine the potential impact on buyers.
Heather Pendergrass Hughes, primary broker at Prime Real Estate Group, analyzed the proposed 50-year mortgage plan and its effects on prospective homebuyers in the mountains.
Hughes found an example would be a $450,000 home at 2.65 percent interest over 30 years would cost approximately $2,770 monthly. The same home on a 50-year plan at the same interest rate would cost $2,450 monthly.
While the lower monthly payments make the 50-year plan appear more affordable, Hughes said buyers need to consider long-term costs.
“On the 30-year mortgage, they paid approximately $560,000 on interest over 30 years, and on the 50-year mortgage they paid over a million dollars in interest. So, double the original price of the home,” Hughes said.
With limited details available about the plan, Hughes expressed concern about interest rates for 50-year mortgages.
“If the interest rate is significantly higher, then that’s gonna balloon even more. It could go up to possibly two and half times you have to pay for on paper or maybe even three times depending on how much they raise,” she said.
Hughes also expressed concerns about the local housing market. Eastern Kentucky has experienced a housing shortage due in part to recent natural disasters.
“With a shortage, then you have the market opening up for people being able to buy more expensive homes, or just homes in general, it could cause some kind of crisis on our market again,” Hughes said.
Hughes said if the 50-year plan becomes available, the decision would depend on individual buyers and their mortgage goals.
She advised homebuyers to use extra cash to pay toward the principal on their loan when possible to pay it off sooner and save money long-term.
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