The Pros & Cons Of Different Lengths Of Mortgage
Posted on: 23 April 2020
If you are thinking about purchasing a home, you need to think carefully about what type of mortgage terms you want for your loan. Different lengths of mortgage loans offer you different benefits and drawbacks to you as a borrower; it is important to understand all of this before determining the length of financing you want for your loan.
15-Year Mortgage
A fifteen-year mortgage is one of the shorter mortgage terms on the market. With a fifteen-year mortgage, you will be able to pay your mortgage off faster and own your home in a shorter period of time. You will be free of a mortgage payment sooner with a fifteen-year mortgage.
Additionally, the interest rates for fifteen-year mortgages are generally lower than interest rates on longer-termed loans. This means you will pay less interest over the entire life of the loan, making the home you purchase more affordable.
A fifteen-year mortgage, though, means you are going to have to make some high monthly payments. You need to have the budget for a more expensive monthly mortgage payment if you go this route.
30-Year Mortgage
A more typical mortgage term is a thirty-year mortgage. A thirty-year mortgage will allow you to pay a much lower monthly payment. Your monthly loan payment may be less than if you were paying rent for a similar home.
You will be able to pay your mortgage off in a reasonable amount of time. If you get your mortgage at the start of your working career, you should be able to pay your mortgage off by the time you retire.
However, you are probably going to have a higher interest rate on your mortgage, and you will pay more interest over the life of the loan.
50-Year Mortgage
Finally, you can get a fifty-year mortgage. Fifty-year mortgages are not that popular, as the terms are long, and the interest rates tend to be really high. If you wait the entire fifty years to pay off the mortgage, you are going to pay a lot of money in interest.
However, your mortgage payments will be really low, which should make it easy for you to stick to your mortgage payments. The total cost of owning the home will be greatest with a 50-year mortgage.
When it comes to the length of your mortgage, 30-years is the standard length. A 15-year mortgage will allow you to quickly pay off your mortgage, and a 50-year mortgage will give you the smallest monthly payments. It is important to weigh the pros and cons of the total length you will pay for the home and what you will have to pay every month.
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