Final answer:
It is false that a 30-year mortgage will have smaller payments but more interest compared to a 50-year mortgage. A 30-year mortgage will have higher monthly payments with less total interest paid, whereas a 50-year mortgage will feature smaller monthly payments but more total interest over the life of the loan.
Step-by-step explanation:
The statement that with a 30-year mortgage you will have smaller payments but pay more interest compared to a 50-year mortgage is false. Instead, with a longer-term mortgage such as 50 years, you would have smaller monthly payments but end up paying more total interest over the life of the loan. Conversely, a 30-year mortgage will have higher monthly payments but less total interest paid compared to a 50-year mortgage, assuming the same interest rate.
For example, imagine you have a $200,000 mortgage loan with a fixed interest rate. On a 30-year mortgage, your monthly payments might be higher, but because the repayment period is shorter than that of a 50-year mortgage, you would pay less in total interest. Increasing the length of the mortgage to 50 years would reduce the monthly payment amount, but the additional 20 years of accruing interest substantially increases the total amount of interest paid over the life of the loan.