What is a Mortgage Term?
When buying a home for the first time, an important thing to consider is the length of your mortgage term. The duration of your mortgage, known as the loan term, is how long it will take to pay off the mortgage in full based on regular monthly principal and interest payments.
Figuring out the mortgage term will determine in large part both your mortgage payments and the amount of interest you pay. For example, if you opt for a 15-year mortgage, your monthly costs will be much higher than they would be for a 30-year mortgage. However, because you’ll be paying less interest, the monthly cost for a 15-year mortgage will not be double the cost the monthly costs for a 30-year mortgage. However, you don’t want to stretch yourself too thin. It’s important to decide on a term before shopping to ensure you wind up with the right loan program to fit your unique financial profile.
Standard Mortgage Term
The standard term of a mortgage is 30 years. It is the most popular program available. A mortgage term of 30 years typically features a fixed rate for the entire duration. Although, some mortgages are based on a 30-year payoff schedule that can adjust monthly or annually. A common example would be the 5/1 adjustable-rate mortgage, which is amortized over 30 years, but adjustable after just five. It’s fixed for the first five years, and adjustable for the remaining 25, but still a 30-year term loan.
Other Common Mortgage Terms
The next most common mortgage is the 15-year mortgage term, which results in higher monthly payments but can result in big savings and lower interest rates. They are also a fixed mortgage rate, so payments will not change over the years. Other options include 10-year, 20-year, 25-year, 40-year, and even 5-year terms. However, not all banks and lenders offer these options.
You must consider your options and figure out what works best for you. If a 20- or 30-year term doesn’t result in significantly better rates, then perhaps it isn’t the best option. However, if you find the larger payments too challenging or if you may move after only a few years, a 15-year term isn’t for you. Put serious thought and consideration into your choice before deciding.
Stonebridge Mortgage Group Offers Guidance On All Mortgage Matters
If you need mortgage broker services in Gresham, call on the experts at Stonebridge Mortgage Group. If you have more questions about the particulars of home buying, Stonebridge Mortgage Group can help guide you through the home buying process. We help you with the pre-approval process and assist with real estate loans and other mortgage solutions, both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon.
If you find yourself in need of a mortgage broker and want to know more about mortgage broker services, allow Stonebridge Mortgage Group to help.
Call us today at 503.661.5580